[PEN-L:644] Re: Re: Re: Re: Currency Values

[Bill Rosenberg <w.rosenberg@xxxxxxxxxxxxxxxxxxxxxxx>]

 Anders Schneiderman wrote:

> Here's another way to think about it.  I just finished working at
> Ruesch International, which manages international currency
> transactions for mid-sized companies who are buying & selling goods
> & services.  In their employee training, they said that roughly 4
> out of 5 currency trades is purely speculative (interestingly,
> roughly 11 out of 12 of these speculative currency trades is a
> "technical" trade, meaning that the trade is based not on a
> speculator's feelings about a country's actions but on a
> mathematical model that uses past behavior to predict what will
> happen in, say, the next few hours or minutes)...

Interesting. By "speculative" I take it from the context you mean
betting on the relative value of the currencies? Then where does
arbitrage activity come into it? That (as I understood it) is what
hedge funds such as Long Term Capital spent their time doing in large
amounts. The reason I think the answer is important is that
arbitraging (say) interest rates is presumably considerably less
destabilising to currencies than currency speculation.

Bill
Bill Rosenberg, w.rosenberg@xxxxxxxxxxxxxxxxxxxx