FXCM Adds ForexBaskets to its Retail Offering

FXCM announced today the introduction of foreign exchange baskets to its retail customers.

A foreign exchange or forex basket is comprised of a mix of several currencies, each initially starting with the same equivalent value. It allows traders to buy or sell a base currency, e.g. USD, against a basket of multiple currencies. The value of the basket will be determined by how the base currency performs vs the other currencies in the basket, since the time of the basket’s inception.

FXCM customers in all global regions, including the UK, Australia and South Africa, will initially be able to trade three different baskets: The Dollar Index Basket, The Yen Index Basket and The Emerging Markets Index Basket.

The Dollar Index basket reflects the change in value of the US dollar and is measured against a basket of major, highly-liquid currencies: the British pound (GBP), Euro (EUR), Japanese yen (JPY) and Australian dollar (AUD).

The Yen Index acts a Japanese benchmark and is designed to reflect the change in value of the Japanese yen against the Australian dollar (AUD) British pound (GBP), Euro (EUR) and Canadian dollar (CAD).

The Emerging Markets Index is designed to reflect the value of the USD against the Chinese Renminbi (CNY), Mexican Peso (MXN), Turkish Lira (TRY) and South African Rand (ZAR).

Brendan Callan, CEO of FXCM, commented: “Our customers typically trade different currencies at the same time to broaden their portfolio, diversify risk or hedge an existing position. Trading a basket of currencies offers them an efficient way to trade against multiple currencies. This reduces the risk of exposure or adverse movements in a single currency and lowers trade costs.”

SWIFT’s RMB Tracker Reports Potential for RMB Growth In 2018

China has been attempting to challenge the global hegemony of the dollar with its currency, the renminbi (RMB) for years. The SWIFT RMB Tracker presents a monthly ranking and weighting of the RMB against other currencies in order to track the rate of its internalization.

The RMB Tracker shows that the currency accounted for 1.61% of domestic and cross-border payments in 2017. The report states that whilst RMB growth stalled in 2017, there are numerous potential factors which could see the growth of the currency in 2018.

Historically cross-border payments have been laden with problems such as delays, errors and unclear payments status. SWIFT’s answer to this quandary has been the launch of its global payments initiative (GPI) which is making transactions faster, transparent and traceable.

The Bank of China was one of the first institutions to go live with GPI, and 22 Chinese banks have now adopted the service. The eventual ubiquity of the initiative will enhance the reputation of China as a country that is open and safe for foreign investment.

SWIFT’s RMB tracker points to other factors which contribute to RMB’s potential in 2018. This includes the rise of China’s cashless economy, the globalization of its banking industry and the adoption of the currency by European banks. Further analysis and insight from the report can be found here.

The Belt and Road initiative aims to strengthen trade links between China, Asia, Africa and Europe. In May, President Xi Jinping pledged a further USD124bn of investment; today, over 100 countries and international organizations have joined the initiative.

By connecting China’s provinces to neighboring countries, along with major investment projects in foreign countries like Pakistan and Indonesia, the currency’s status and value are poised grow throughout 2018.

Whilst the uncertainty of regulations could strangle the growth of RMB in 2018, initiatives such as the SWIFT GPI and China’s Belt and Road initiative are set to reshape the way the Chinese banking industry and the RMB are seen around the world in the long term.

With so many factors at play, all eyes are focused on the RMB this year as it takes another step towards its goal of challenging the dollar’s global hegemony.