This content was produced in partnership with Citibank Singapore
The year is coming to a close, and 2022 has certainly been one that’s marked by volatility and inflationary pressures, exacerbated by supply shocks arising from the Russia-Ukraine conflict. Rising energy and food prices, among others, have seen central banks all over the world turning to policy tools to try to rein in inflation.
In Singapore, overall inflation matched a 14-year high recorded in June 2008. To help manage increasing inflation and the rising cost of living, the Monetary Authority of Singapore (MAS) has tightened monetary policy five times within a year – the first move was in October 2021, and the latest such action was in October 2022.
In its latest half-yearly monetary policy statement in October 2022, MAS noted that the global economy will likely face high inflation and lower growth next year, and core inflation is expected to remain elevated over the next few quarters¹.
What does this mean for investors? For one thing, the strengthening outlook of the Singapore dollar could mean opportunities for investors looking to get into forex trading.
What is forex trading?
Simply put, foreign exchange is the conversion of one currency into another.
Think of the money changers you visit to convert currencies when traveling abroad – with forex trading, you’re essentially engaging in a similar activity but with the intention of earning a profit. When you purchase one currency while selling another, you can potentially realise a profit if the exchange rate moves in your favour or incur losses if the exchange rate moves against you.
Forex markets are open 24 hours a day from Monday through Friday. They close on Saturday 11am till Monday 10am (Singapore time).
An example of how forex trading works
Forex trades are expressed as currency pairs, which can look something like this:
EUR / USD
USD / JPY
GBP / USD
AUD / USD
The currency on the left is referred to as the “base currency”. The currency on the right is referred to as the “quote currency”.
The exchange rate of the currency pair indicates how much of the quote currency (the one on the right) is required to buy a single unit of the base currency (the one on the left). For example, if the exchange rate for USD / GBP is 0.86, then it would cost 0.86 British pounds to buy one US dollar.
If you believe the base currency (USD) will rise against the quote currency (GBP), you would buy the base currency and sell the quote currency, i.e. go long on USD / GBP). If you believe the opposite is true, you would go short on USD / GBP.
Depending on whether your view pans out, you will see profit or loss based on the degree of the movement. For instance, if you went long on USD / GBP, then the higher the US dollar rises against the pound, the higher your profit.
This is a simplified example of the spot market; one of the most popular ways to trade forex.
There are other methods such as the forward market and futures market. These markets are based on parties setting an agreed-upon price for a currency, at a future date. In this form of forex trading, you deal with contracts, which feature the right to buy or sell certain currency types at the given conditions, rather than dealing with actual currencies themselves.
However, these are advanced forms of forex trading, and may be better suited to seasoned forex traders.
Why trade forex?
In terms of when to trade, the forex market is open 24 hours a day from Monday through Friday. The market closes on Saturday 11am till Monday 10am (Singapore time).
The forex market is also highly liquid. This means forex transaction costs, called the spread, tend to be low.
Though not all forex trading platforms offer leveraging, it is possible to avail of comparatively high leverage, typically up to 100:1. This means that if you wanted to, you can trade up to $100 of currencies for $1 of actual cash that you hold. Leveraging potentially allows you to amplify your gains and realise larger returns. The converse also holds true – leveraging could also mean amplified losses and therefore leverage trade should only be entered into only after careful consideration – including one's appetite for loss.
Forex trading requires discipline and risk management
The advent of the Internet has made forex trading accessible to many. However, while it can be relatively easy to start trading forex, it requires self-discipline.
This means implementing strategies such as the use of trailing stop loss orders and using practice accounts to prepare yourself.
Some forex trading platforms, such as Citibank Online Foreign Exchange (eFX)², provide you with the tools to do this. On eFX, you can use the mobile app to set up instructions to automatically buy or sell when a currency reaches a target rate, or receive alert messages when your various currencies are at the right rate to buy or sell.
Citi’s eFX also allows you to convert currencies on-the-go with the Citi Mobile App or Citibank Online. You can personalise your watchlist with live-streamed FX rates.
Avoid emotional investing or trading
The emotional aspect of forex trading also cannot be ignored. The high volatility of the forex markets is not for everyone. You also cannot allow your emotions to override your strategies – this means avoiding actions such as “doubling down” against your plans, because of an unexpected lucky streak.
Forex traders should also keep abreast of current events, such as geopolitical tensions or trade deals, as these could have an impact on currency rates. Even seemingly minor news events – such as the opening of a new shipping port in a distant country – might end up having a significant impact on forex markets. The Citi eFX platform provides FX polls to help you identify market consensus; these help you to make better-informed trading decisions. Citibank’s eFX platform also has the latest FX insights, data and charts to help you trade.
Additionally, with a Global Foreign Currency Account, you will be able to enjoy free withdrawals at any Citibank ATMs worldwide with Citibank Debit Mastercard. There will also be no surprises on hidden or third-party fees when you spend overseas or shop online.
While nothing in forex – and in life – is 100 per cent certain, good traders try to minimise the role of luck, by doing their homework and staying on top of their trades.
¹ MAS Monetary Policy Statement – October 2022. Outlook. Monetary Authority of Singapore. (2022, October 14).
² Please refer to the Citibank eFX Disclaimer here.
A man was charged with molesting a woman after he had trespassed into a women's toilet at Siloso Beach in Sentosa.
Singapore's economy grew faster that official forecasts in 2022 but slower activity in the fourth quarter points to significant risks ahead for the city-state in the new year as global demand weakens and inflationary pressures weigh. Singapore's economy grew 3.8% in 2022, preliminary data from the Ministry of Trade and Industry showed on Tuesday, beating government forecast for growth of 3.5% and down from 7.6% in 2021. Gross domestic product (GDP) expanded 2.2% in October-December on a year-on-year basis, the government data showed, almost half the 4.2% growth seen in the third quarter.
In recent months, the interest rate and therefore returns of the Singapore Savings Bond (SSB) have been rising steadily. Should you buy the…
As interest rates for home loans continue to climb, mortgage stress levels escalate. Two in five Singaporeans (40 per cent of Singaporeans) faced some difficulties in paying off their mortgage loans in 2022. The percentage of Singaporeans facing mortgage stress in 2021 was just 31 per cent. The Fourth OCBC Financial Wellness Index revealed these […] The post Mortgage stress in Singapore is rising appeared first on iCompareLoan.
NEW DELHI (Reuters) -India's Supreme Court on Monday upheld the legality of the government decision in 2016 to demonetise 86% of the country's cash in circulation, saying the decision was taken in consultation with the central bank and followed due process. One out of the five judges wrote a dissenting opinion. "The…notification dated 8th November 2016 does not suffer from any flaws in the decision-making process," Justice B R Gavai, one of the four judges who agreed on the decision, said in a written opinion.
Gold prices kicked off 2023 by hitting their highest levels in more than six months on Tuesday as benchmark Treasury yields fell, while investors assessed the prospects for more Federal Reserve interest rate hikes, which acted as a significant headwind to bullion last year. With an economy that could go into recession, uncertainty over the Fed's rate-hike path and geopolitical risks, "investors remain a little cautious, and gold is looking pretty attractive," said Edward Moya, senior analyst with OANDA. Benchmark U.S. 10-year Treasury yields were near their lowest in a week, reducing the opportunity cost of holding non-yielding gold.
We feature five REITs that increased their dividends amid difficult times. The post <strong>Year in Review: 5 REITs That Increased Their DPU in 2022</strong> appeared first on The Smart Investor.
Tesla said Monday it had delivered 1.31 million electric vehicles in 2022 — a record for the US automaker and a 40 percent jump from a year before, but still short of its own and Wall Street's expectations.
Comba Telecom is a global solutions and services provider of wireless and information communications systems.
SINGAPORE – Media OutReach – 2 January 2023 – Usher in good health, wealth and happiness in the Year of the Rabbit with Bread Garden's collection of delectable Chinese New Year goodies for 2023! Featuring an ensemble cast of familiar signature items, all-time favourites and innovative new bakes, the CNY treats from Bread Garden offer pure indulgence of both classic tastes and new flavours for you and your whole family. A much-beloved brand among lovers of Chinese New Year festive snacks, Bread G
The Indian rupee declined against the U.S. currency on Tuesday, fuelled by the dollar's surge versus its major peers and importer hedging, though the Reserve bank of India's likely intervention kept the drop short of the 83-per-dollar mark. The 83.05-level should be a stop-loss for unhedged positions of importers, he added.
WASHINGTON, D.C., US – Media OutReach – 3 January 2023 – Tia Lee Yu Fen, global c-pop singer, actress and fashion icon has kick-started her global #EmpowerHer campaign with a donation to Teen's Key, a non-profit organisation that supports young women in Hong Kong. Donations to Teen's Key Hong Kong will boost the organisation's educational and service operations. Teen's Key is known for providing holistic treatment for young women in crisis and supporting their sexual and reproductive health. The
India's manufacturing industry ended 2022 on a solid footing as business conditions improved at the fastest rate in over two years while growth in new orders and output accelerated, a business survey showed on Monday. The manufacturing purchasing managers' index, compiled by S&P Global, rose to 57.8 in December from November's 55.7, better than a Reuters poll median forecast for 54.3. Monday's data cemented the view Asia's third-largest economy is better placed than many other emerging economies to weather the impact of a potential global recession.
Each Singaporean household can receive S$300 in CDC vouchers. Here's how to claim and use them.
The hotel’s total inventory of 1,080 rooms is now fully operational.
SINGAPORE – Media OutReach – 3 January 2023 – Global c-pop star Tia Lee Yu Fen recently released her "Goodbye Princess" music video – and broke records with 100 million views on YouTube in just 19 days. Tia has chosen Teen's Key in Hong Kong as the first charity to benefit from her global #EmpowerHer campaign. Teen's Key Hong Kong will be the first of many organisations around the world to receive support from Tia Lee's #EmpowerHer campaign. Teen's Key address young women's sexual and reproducti
The Indian rupee was trading higher against the U.S. dollar on Monday, helped by likely position building and lack of cash dollar demand, traders said. The rupee was at 82.5750 per U.S. dollar by 10:50 a.m. IST, compared with 82.72 in the previous session. The U.S. holiday means there is no cash dollar demand and then our (dollar) sell-side order book is a bit active, said a spot trader at a private bank.
The group has been looking to divest its investment in Myanmar.
Prior to his appointment, Kok held dual roles as DBS’s regional head of credit derivatives and quant tech modelling.
Banking system loans contracted 1.8% y-o-y in November 2022.
