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The Effect Of Forex Trading On An Global Economy
2018 Economic Research
Among the biggest financial markets is the forex market. This market experiences huge volumes of trade on a daily basis. The market functions just like the stock market, although the commodity of exchange, in this case, is currency. Profits are earned from the discrepancy between the exchange rates of the currency. The rates themselves are influenced by a country’s economic strength. The symbiosis between the economy and currency trading is thus an important part of the forex market. There are indeed other factors as well in the forex that must be considered when analyzing the effect of forex on the economy.
The following is a breakdown of the character of the forex market and its effects on the economy.
Key Sectors of the Market
In any given economy, the two sectors in the forex market are the retail sector and institutional sector. The retail sector is basically made up of individual small-scale traders. This market has no major impacts on the economy. The institutional market, however, has some key effects on the economy. This sector is composed of all the big financial players that shape the economy. Big institutions are responsible for lending and thus influence businesses in the economy. The economy depends on the demand and supply forces at the institutional level to thrive. While there is no direct influence of this market to the economy, the ramifications of trading in the market can be felt in the economy.
The Purpose of Trading
The forex market is solely responsible for facilitating international trade. Currency exchange enables institutions to do business beyond the borders of the nation. Just like in any other market, a strong currency has more value and is able to dominate in the international trading market. The activities of traders in the forex market also influence its prosperity. When there is an uncertainty in the market, speculators in the forex market cause price adjustments.
This, in turn, affects the profit margins of the traders.
Long-Term Effects of Forex on the Economy
Forex trading affects the economy in both the short-term and long-term. Economic activity determines the demand for a particular currency, which in turn has an effect on the value of the currency. If the currency has a constant demand due to increased tourism or increased earnings from manufactured goods, then the economy is bound to grow. Sometimes, adjustments in the short-term become necessary especially when the demand has been dormant for a long time. Countries that have consistently focused on adding value to their goods attract good revenues in the forex market. In overall, the forces of demand ultimately determine the forex market’s performance and thus the economy as a whole.
Forex and International TradeAs reported by bestonlineforexbroker.com, international trade highly influences forex rates. The demand for a particular currency in the forex market determines the benefits a particular nation gets from forex trading. When two nations trade, they must agree on a particular currency of exchange. The currency chosen for exchange attracts an increase in demand and thus translates to an increase in revenue for the traders involved in its exchange. Strong nations whose currencies are high in demand thus get a lot of revenue from the forex market.
New Blockchain Course Introduced in USC
The Viterbi School of Engineering
The Viterbi School of Engineering has a new course in the curriculum for students. The course focuses on blockchain and it was introduced after an apparent quest for the course by both the students and instructors. This course is the first of its kind in the school and it aims at imparting students with the knowledge about the possible applications of blockchain in business. The course, which is taught by associate professor Nitin Kalé, also focuses on the relevance of blockchain in the society as a whole.
Blockchain is the technology that enabled Bitcoin, one of the best cryptocurrencies, to reach its full potential. The technology is widely lauded for several features that include:
- Fast transactions
- IMproved security
- Easy verification of transactions
The Course Has Gained Popularity
The initial test run for the course at the school proved to be successful according to the professor. Many students expressed interest and the class size had to be adjusted upwards. The blockchain course has indeed had a similar reception in other universities like UC Berkeley, Stanford, and Princeton where it has been ongoing for a while now.
Professor Kalé admits that the course he introduced was a result of his own commitment to study and analyze the blockchain database for a period of two years. While the course is not complete, he has great hopes for it.
The long-term goal for both the school and the professor is to have a blockchain curriculum that will allow students to access the course as a permanent offering.
The Viterbi Information Technology allows for either a minor or specialization course structure. Professor Kalé hopes that both of the options will be available for students by the end of 2019.
More Improvements Will be Made on the Course
Professor Kalé hopes to improve the course over the course of time. Even though the first attempt was successful, he admits that some inefficiency issues were identified which must be fixed. There is still room to add some more topics and he hopes to add them before the next run starts.
On the part of the students, the interest in blockchain has been there even before the course was introduced. Trojan Blockchain Society, for instance, was founded by Daniel Aghachi to bring together students who were interested in the technology. Aghachi, a junior student pursuing business administration represents a legion of other students who come from different fields but share the same passion. Aghachi cities the lack of a central body to coordinate the affairs of students interested in the technology as the key motivator for the formation of his organization.
Aghachi and Professor Kalé have faith in the new course and they are now the leading figures who are spreading the gospel about the new course. They both hope that the faculty and the entire school fraternity will get behind them. Professor Kalé has already demonstrated his commitment to the course by sending actual bitcoin to students as part of coursework.