Economy
How a Small Business Owner Can Invest in Forex
Elevate your small business by increasing your available capital through our guide on how business owners can invest in the forex market.
How to Invest in Forex as a Business Owner
Most people who are building a retirement nest egg or hoping to make a big purchase may want to grow their savings through investment. Forex is very useful for such a purpose, as there are few barriers to entry and the learning curve is not very steep.
What many do not realize, however, is that small businesses can also benefit from trading forex. Using platforms such as OANDA, small business owners can ensure they have access to money in other currencies while investing their capital with the hopes of turning a profit on most trades.
Below is a guide that explains how you can start investing in currency today as a small business owner.
Why Currencies Fluctuate in Value
The key to investing in any asset or security is to predict whether the asset in question will rise or fall in value. Stocks fall and rise based on the perceptions of a company and its performance. Currencies rise and fall in value based on supply, demand, and other factors.
Currencies with high inflation are likely to see a drop in the value of their currency, as the country has less purchasing power due to inflation. Higher interest rates can also impact currency values, raising them, as investors who have money in that currency can now get higher returns on their funds. Lower interest rates usually see a drop in currency value.
Political stability, government debt, and the amount of foreign currency the central bank of the country in question owns can also impact the value of that country’s currency. If there is instability, the currency is likely to fall in value, while central banks can use foreign currencies to weather volatility in their currency’s value.
Why Trade in Currencies?
Many business owners may wonder why they need to trade in currencies. There are two primary reasons: having access to money in other currencies and making a profit on your existing capital.
If you have money sitting in your business account, putting it to use in the forex market is a great way to increase returns. Rather than keeping it in a company checking or savings account, you can get better returns through trading forex a few times a week.
Even if you are not interested in growing your capital through forex, but you plan to do business in other countries, using the market is useful. The forex market can help you access the best exchange rates while accruing small profits on trades.
Types of Forex Trades
There are two significant forms of trading foreign currencies, spot trading and futures trading. A spot trade is extremely simple, as you agree to exchange currencies with another party at a set price. The exchange rate is determined by the present value of both currencies.
A futures trade is a little more complex, as it involves buying or selling a currency for another at a set future date. A trader may engage in a futures trade if they believe the value of a currency will rise or fall within a set period of time.
Currency Pairings
When you first create an account at a site that allows you to trade on the Forex market, you will likely see a lot of currency pairings. You are trading in pairings, such as GBP/USD or EUR/USD. The pairings signify the two currencies you are exchanging, such as exchanging a Great British Pound for a United States Dollar or a Euro for a US Dollar.
The currencies that make up most of the Forex market are the US Dollar, Canadian Dollar, Great British Pound, Euro, Japanese Yen, Australian Dollar, and the Swiss Franc. You can trade other currencies, but finding other investors to complete spot trades and futures trades may be a little more difficult.
Liquid, 24-Hour Market
A significant advantage of the Forex market is that you are taking part in a highly liquid market that is active nearly 24 hours a day, seven days a week. Trading in foreign currencies opens on Monday morning in Australia and Asia and is ongoing 24 hours a day until Friday evening in the United States or South America.
The Forex market is extremely liquid, as you can complete spot and futures trades in a matter of seconds. If you are trading major currencies, finding a buyer that takes the opposite view of your investment is extremely easy.
Grow Your Business Through Forex
Business owners need to take advantage of every available resource if they are to grow their capital. Whether you are accessing capital through business loans, investors, or other means, you can increase the money available to your operation through trading.
While you may not have time to become an expert in stocks, the forex market is a lot easier to learn. Trading Forex allows you to access foreign currencies, which may be useful for doing business in other countries. You can also make a profit on most trades, provided you have some understanding of how the forex market works, and why currencies rise and fall in value.
If you are self-employed or running a small business, leveraging the forex market is a great way to put your capital to use.
By Adedapo Adesanya
Food Concepts Plc neutralized the gains recorded by three securities, returning the NASD Over-the-Counter (OTC) Securities Exchange into the negative territory with a 0.27 per cent loss on Thursday, December 4.
Yesterday, the share price of the parent company of Chicken Republic and PieXpress declined by 34 Kobo to sell at N3.15 per unit compared with the previous day’s N3.49 per unit.
This shrank the market capitalisation of the OTC bourse by N5.72 billion to N2.136 billion from N2.142 trillion and weakened the NASD Unlisted Security Index (NSI) by 9.57 points to 3,571.53 points from 3,581.10 points.
Business Post reports that Central Securities Clearing System (CSCS) Plc went down by 50 Kobo to N38.50 per share from N38.00 per share, FrieslandCampina Wamco Nigeria Plc gained 29 Kobo to sell at N55.79 per unit versus N55.50 per unit, and Geo-Fluids Plc added 5 Kobo to close at N4.60 per share compared with Wednesday’s closing price of N4.55 per share.
Trading data indicated that the volume of securities recorded at the session surged by 6,885.3 per cent to 4.3 million units from the 61,570 units posted a day earlier, the value of securities increased by 10,301.7 per cent to N947.2 million from N3.3 million, and the number of deals went up by 146.7 per cent to 37 deals from the 15 deals achieved in the previous trading session.
At the close of business, Infrastructure Credit Guarantee Company (InfraCredit) Plc was the most traded stock by value on a year-to-date basis with the sale of 5.8 billion units for N16.4 billion, trailed by Okitipupa Plc with 170.4 million units worth N8.0 billion, and Air Liquide Plc with 507.5 million units valued at N4.2 billion.
InfraCredit Plc also finished the session as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Dipo Olowookere
The upward trend witnessed at the Nigerian Exchange (NGX) Limited in recent sessions continued on Thursday as it further improved by 0.10 per cent.
This was despite investor sentiment turning bearish after the local equity market ended with 23 price gainers and 28 price gainers, indicating a negative market breadth index.
UAC Nigeria gained 10.00 per cent to finish at N88.00, Morison Industries appreciated by 9.94 per cent to N3.54, Ecobank rose by 8.53 per cent to N36.90, and Coronation Insurance grew by 8.47 per cent to N2.56.
On the flip side, Ellah Lakes depreciated by 10.00 per cent to N13.14, Eunisell Nigeria also shed 10.00 per cent to finish at N72.90, Transcorp Hotels slipped by 9.95 per cent to N157.50, Omatek shrank by 9.23 per cent to N1.18, and Guinea Insurance dipped by 8.46 per cent to N1.19.
Yesterday, the All-Share Index (ASI) went up by 152.28 points to 145,476.15 points from 145,323.87 points and the market capitalisation chalked up N97 billion to finish at N92.726 trillion compared with the previous day’s N92.629 trillion.
Customs Street was bubbling with activities on Thursday, though the trading volume and value slightly went down, according to data.
A total of 1.9 billion stocks worth N19.2 billion exchanged hands in 23,369 deals during the session versus the N2.3 billion valued at N21.0 billion traded in 21,513 deals a day earlier.
This showed that the number of deals increased by 8.63 per cent, the volume of transactions depleted by 17.39 per cent, and the value of trades decreased by 8.57 per cent.
For another trading day, eTranzact led the activity chart with 1.6 billion units sold for N6.4 billion, Fidelity Bank traded 31.0 million units worth N589.3 million, GTCO exchanged 28.3 million units valued at N2.5 billion, Zenith Bank transacted 27.1 million units for N1.6 billion, and Ecobank traded 21.9 million units worth N744.3 million.
By Adedapo Adesanya
The Naira marginally depreciated against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, December 4 amid renewed forex pressure associated with December.
At the official market yesterday, the Nigerian currency lost 0.01 per cent or 18 Kobo against the Dollar to close at N1,447.83/$1 compared with the previous day’s N1,447.65/$1.
It was not a different scenario with the local currency in the same market segment against the Pound Sterling as it further shed N15.43 to sell for N1,930.97/£1 versus Wednesday’s closing price of N1,925.08/£1 and declined against the Euro by 20 Kobo to finish at N1,688.74/€1 compared with the preceding session’s N1,688.54/€1.
Similarly, the Nigerian Naira lost N5 against the greenback in the black market to quote at N1,465/$1 compared with the previous day’s value of N1,460/$1 but closed flat against the Dollar at the GTBank FX counter at N1,453/$1.
Fluctuations in trading range is expected to continue during the festive season as traders expect the Nigerian currency to be stable, supported by intervention s by to the Central Bank of Nigeria (CBN)in the face of steady dollar demand.
Support is also expected in coming weeks as seasonal activities, particularly the stylised “Detty December” festivities, will see inflows that will give the Naira a boost after it depreciated mildly last month, according to a new report.
“As the festive Detty December season intensifies, inbound travel, tourism spending, and diaspora inflows are expected to provide moderate support for FX liquidity,” analysts at the research unit of FMDA said in its latest monthly report for November.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450 next week, buoyed by improved FX interventions by the apex bank.
Meanwhile, the crypto market was down as the US Federal Reserve’s preferred inflation gauge, core PCE, likely rose in September—moving in the wrong direction. However, volatility indices show no signs of major turbulence.
If the actual figure matches estimates, it would mark 55 straight months of inflation above the US central bank’s 2 per cent target. The sticky inflation would strengthen the hawkish policymakers, who are in favour of slower rate cuts.
Ripple (XRP) depreciated by 4.5 per cent to $2.08, Solana (SOL) went down by 3.8 per cent to $138.11, Litecoin (LTC) shrank by 3.1 per cent to $83.23, Dogecoin (DOGE) slid by 2.5 per cent to $0.1463, Cardano (ADA) declined by 2.1 per cent to $0.4368, Bitcoin (BTC) fell by 0.9 per cent to $91,975.45, Binance Coin (BNB) crumbled by 0.9 per cent to $899.41, and Ethereum (ETH) dropped by 0.7 per cent to $3,156.44, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
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