Influence of Banks in Forex Trading
Banks have the most important function in the forex world, this is because without banks, the forex market will not take place. Then it is also known as the interbank money market (PUAB) which has a very important role in currency circulation in global business. If the amount is not large, it is the customer who runs the buying and selling system. However, if the amount is very large, then the bank will carry out the transaction.
The function of the bank will not be separated from the main function of the central bank which has a major role as controlling the supply of money circulating in the market and society. Inflation related to interest rates also comes from the large role of the central bank. In the forex market, banks can also act as facilitators, or hedgers, and even banks can also act as speculators.
In the forex market, the role of banks is very important because the forex market itself is a market between one bank and another bank around the world where there are so many goals and interests of the bank in conducting transactions in the market. One thing that is certain is that banks are still looking for profits from buying and selling transactions carried out. Banks that are considered to have an important role as big players have 3 very important main roles, namely:
Facilitator
In this case, banks have a very important role to facilitate all currency transactions from clients, be it small-scale tourists to large-scale multinational companies that need services in terms of currency exchange.
hedger
Banks also protect their client's assets from decreasing, this is what is called a hedger. Large multinational companies engaged in the export-import sector usually entrust a number of assets to the bank which is usually in the form of currency to the bank. Due to fluctuations in the currency market, the value of their assets changes. This is where the task of the bank to maintain and maintain the value of these assets so as not to decrease. Not only currency, banks also hedge against other assets.
Speculators
In every opportunity, banks make speculations with the aim of making a profit so that the bank remains healthy. They also have a specific allocation of funds to invest in the forex market, as many traders do. The bank also has analysts and economists who are officially certified and have experience as a professional trader. However, unlike retail traders, banks generally make large-scale forex investments that can have a big impact on a currency.
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