Forex trading is a trade of two currencies based on their floating market value. For example, a Thai trader sells his currency against another at a current market exchange rate.
To be able to trade, you must open an account and hold the first currency and then exchange to the second currency. Forex trading has a base currency, which is the first currency is the base currency, while the second currency is the quote currency.
Currency trading can be done 24 hours around the clock except on weekends and holidays.
The prices in forex trading vary daily and there are factors that influence its fluctuation.
Some factors weighed in from both currencies in the transaction are; Inflation Differentials, Interest Rate Differentials, account deficits, terms of trade. If a country is trading, its public debt, and economic and political stability is also considered.
When one currency declines, its pair rises as the price value of any currency is always opposite of its currency pair. Most people are not aware that they have already participated in forex trading. Investors and businesses that exchange currency to pay for stocks and employees overseas are the most obvious traders in the market. Participants in the trade might also be travelers or foreigners who exchange money to purchase goods from other countries. Banking institutions are large traders that exchange money to service or lend money to foreign clients.
Governments trade their currencies to aid imbalances in their finances or ease the country’s economic conditions. The government of growing economies encourages traders in and out of their country to trade currencies or foreign investors to invest in their currency.
Forex Trading Thailand has a new framework by the Thai government that expanded the list of instruments of trading. The new framework also lifted some of its restrictions when it comes to Forex Trading. Retail investors can now directly trade with a yearly cap of $200,00 when before they could only trade via intermediaries.
Forex Trading is regulated by the Bank of Thailand and the country’s SEC or Securities and Exchange Commission. These oversights have given a cumulative aggregated limit on investments of $150 billion to retail traders after they have filled a one-time registration with the Bank of Thailand.
Trading precious metals in foreign currencies are now available for traders in Thailand only with trading companies that have been approved by the Bank of Thailand.
In the old system, such transactions could only be done in Thai Baht, the local currency. The central bank adopted a more strict approach tracking forex transactions when the Baht peaked in June 2019. Institutions that participate in Forex Trading who contradict the new approach are given various penalties from warnings, fines, and closure of operations.
The Bank of Thailand and Thai SEC aims to maintain the stability of Baht, centralize Forex Trading Thailand and monitor the capital flow in and out of the country.
In order to stabilize the Thai Baht, the bank restricts the transactions of non-residents of the country, and issues licenses for individuals and institutions to be able to participate in forex trading.
