Look, I’ll be the first to admit: I’m no currency expert. In fact, the only time I ever even think about foreign exchanges are when I’m traveling abroad.
But even I noticed that there was a huge currency rigging scandal this week.
Apparently, five huge global banks got caught conspiring to manipulate the price of dollars and Euros to increase profits.
That’s a super shady thing to do, and now they have to pay… big time.
When Banks Pay $5 Billion in Fees, Everyone Loses
One thing I don’t quite understand about this story is, “who loses here?”
I mean, yes, fixing markets for your own benefit is a bad thing to do. We’re looking for the invisible hand to move markets, not the visible strong arm of the biggest banks in the world. It’s just that this is different than Abramoff, who lied to investors and stole money.
Does anyone lose here?
Does anyone win?
I wonder if the $5B in fees is less than the ridiculous profits they made by fixing currency in their favor. And if it is, doesn’t that just teach the banks to keep doing what they’re doing? Maybe they’ll want to use different internet chat rooms so they’re not so easily caught, but even if they are, they still come out ahead, after the fees have been paid.
Does currency rigging affect us all in ways we don’t feel?
That’s my conclusion.
There is money to be made in currency exchanging, even if you’re not a huge bank that has the power to collude and adjust the market in your favor.
In fact, there are plenty of people who make their living on the Foreign Exchange Market (Forex for short).
I haven’t delved into it myself, but if you’re interested, do your homework. Read that Wikipedia page, learn the ins and outs, then use a company like CMC Markets, one of the first companies to provide online forex training, to start dabbling in foreign currencies.
Then come back and tell us about your experience.