Deemed as the largest financial market in the world, the currency or forex market boasts a trading size of USD4 trillion daily. Currency exchange is inevitable following globalisation, international trade, foreign investments and cross-border travelling.
Currency came into being for commercial transactions circa 3000 years BCE in Egypt and Mesopotamia. The earliest forms of currency ranged from stones and sea shells to gold nuggets later on.
Currency, generally known as money today, was invented to act as a medium for buying and selling of goods and services. Simply put, to buy and sell food.
And now, currency is itself a commodity, no longer merely a measurable medium used in the trading of commodities, substantiated by the limitless currency tradings happening by the second, 24 hours a day, 6 days a week. One might say, money is taking after gold, which is also a currency turned commodity.
Nations are already manipulating the supply of their respective currencies to the advantage of their economy and commerce, hence influencing the strength (currency exchange rate) of their currency.
That aside, how much of that USD4 trillion worth of currency trading a day involves necessary currency exchange for buying and selling of goods and services? And how much is solely for profit, performed by currency traders all over the world, from George Soros and the like to possibly the person sitting next to you in the subway, the difference is just the magnitude of their profits.
The trading volume of such for-profit speculations of currencies is added to performance data of the entire financial system, locally, regionally, and globally. For-profit currency trading is seen as an extra source of income for the man in the street; an egg, albeit perhaps a small one, in a high net worth investor’s nest egg; as well as an option for asset/fund managers.
It is beyond buying and selling food, beyond paying school fees, beyond vacationing overseas, beyond doing business with your neighbour; beyond a bubble, beyond the collapse of a currency, beyond the dressed up financial and economic data, beyond national reserves.
Money is never the root of all evil. I am leaving it to you.