JF B's List: Articles Currency

• Currency

   

  See also: Foreign exchange market

   

  The term carry trade without further modification refers to currency carry trade: investors borrow low-yielding currencies and lend (invest in) high-yielding currencies. It tends to correlate with global financial and exchange rate stability, and retracts in use during global liquidity shortages.^[2]

   

  The risk in carry trading is that foreign exchange rates may change to the effect that the investor would have to pay back more expensive currency with less valuable currency.^[3] In theory, according to uncovered interest rate parity, carry trades should not yield a predictable profit because the difference in interest rates between two countries should equal the rate at which investors expect the low-interest-rate currency to rise against the high-interest-rate one. However, carry trades weaken the currency that is borrowed, because investors sell the borrowed money by converting it to other currencies.

   

  By early year 2007, it was estimated that some US$1 trillion may be staked on the yen carry trade.^[4] Since the mid-90's, the Bank of Japan has set Japanese interest rates at very low levels making it profitable to borrow Japanese yen to fund activities in other currencies.^[5] These activities include subprime lending in the USA, and funding of emerging markets, especially BRIC countries and resource rich countries.

   

  [edit] Known Risks

   

  The 2008–2009 Icelandic financial crisis has among its origins the undisciplined use of the carry trade. The US dollar and the yen have been the currencies most heavily used in carry trade transactions since the 1990s. There is some substantial mathematical evidence in macroeconomics that larger economies have more immunity to the disruptive aspects of the carry trade mainly due to the sheer quantity of their existing currency compared to the limited amount used for FOREX carry trades.

• As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks.^{[citation needed]} According to the Bank for International Settlements,^[2] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion as of April 2007. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:

   
   
  • $1.005 trillion in spot transactions
   
  • $362 billion in outright forwards
   
  • $1.714 trillion in foreign exchange swaps
   
  • $129 billion estimated gaps in reporting
• Controversy about currency speculators and their effect on currency devaluations and national economies recurs regularly. Nevertheless, economists including Milton Friedman have argued that speculators ultimately are a stabilizing influence on the market and perform the important function of providing a market for hedgers and transferring risk from those people who don't wish to bear it, to those who do.^[16] Other economists such as Joseph Stiglitz consider this argument to be based more on politics and a free market philosophy than on economics.
• Large hedge funds and other well capitalized "position traders" are the main professional speculators. According to some economists, individual traders could act as "noise traders" and have a more destabilizing role than larger and better informed actors
• Currency speculation is considered a highly suspect activity in many countries.^[where?] While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital, currency speculation does not; according to this view, it is simply gambling that often interferes with economic policy. For example, in 1992, currency speculation forced the Central Bank of Sweden to raise interest rates for a few days to 500% per annum, and later to devalue the krona.^[19] Former Malaysian Prime Minister Mahathir Mohamad is one well known proponent of this view. He blamed the devaluation of the Malaysian ringgit in 1997 on George Soros and other speculators.

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     <!--printable = ON--><!---->The forex market is the largest financial market in the world, trading around $1.5 trillion each day. Trading in the forex is not done at one central location but is conducted between participants through electronic communication networks (ECNs) and phone networks in various markets around the world.
• The market is open 24 hours a day from 5pm EST on Sunday until 4pm EST Friday
• To do this, they enter into currency swaps, giving them the right, but not necessarily the obligation to buy a set amount of a foreign currency for a set price in another currency at a date in the future. By doing this, they are limiting their exposure to large fluctuations in currency valuations. Due to the importance of currencies on the international stage there needs to be round-the-clock trading at all times. Domestic stock, bond and commodity exchanges are not as relevant, or in need, on the international stage and are not required to trade beyond the standard business day in the issuer's home country.

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• Gains et pertes découlant des opérations de change
  Les gains et pertes découlant des opérations de change résultant des transactions en capital conclues en devises étrangères sont considérés comme des gains ou des pertes en capital. Cependant, DT Max reportera uniquement le gain net ou la perte nette qui dépasse 200 $ pour l'année. Si le montant net est égal ou inférieur à 200 $, il n'y a pas de gain ou perte en capital, et DT Max reportera rien dans la déclaration.

• DeviseEtrangere transaction en devise étrangère (oui/non)

     Consultez le guide général d'impôt de l'ARC :
    Ligne 127 - Gains en capital imposables
    Ligne 217 - Perte au titre d'un placement d'entreprise

• La demande étrangère de titres canadiens a fortement augmenté en septembre, indiquent les données publiées jeudi par Statistique Canada.

         

  Les non-résidents ont ajouté pour 13,6 milliards $ à leurs portefeuilles et ce, principalement, par le biais d'acquisitions d'actions canadiennes qualifiées de considérables pour l'agence fédérale de la statistique. Les investissements étrangers en actions canadiennes ont ainsi atteint 12,9 G$ en septembre, soit la plus forte rentrée de fonds enregistrée depuis avril 2004