When speaking about foreign exchange market and its major importance on the entire financial market, we actually refer to the dealers who perform the working tasks and contribute to its active functioning. If a comparison is made between the broker, who trades with securities on behalf of and for the account of the client and is considered to be more represented category in the economic terminology among the people, and the dealer, who is also a part of the financial markets, but in the segment of trading with foreign payment assets, i.e. currencies. Unlike the brokers who may also work as independent broker companies, the dealers in our country are part of the bank’s foreign exchange markets and the result of their operation is among the more significant items in the realized bank profits. The dealer reaches the decision for sale (at which price and at which moment of the movement at the stock he shall close the transaction) when he believes that he can make the highest profit, which by itself is accompanied by high stress and risk at the same time.
Dealers are trained experienced professionals, who, in addition to the principal activity related to daily trading with currencies, also monitor the current situation at the world markets, as well as the latest data that the economies are publishing, of which the movement of the currencies at the world markets depends on (as are unemployment, inflation, GDP, consumer price indices, etc.)
Under terms of stable Macedonian denar and fixed foreign exchange rate related to the EUR, the attention of the country is directed towards the currencies which are fluctuating and price of which is created freely at the market, and these are being traded on daily basis at the foreign exchange market and clients are using in their transaction. So, for example, the US Dollar, which right after the EUR is the most traded currency for international payments in the country, is monitored via different technical and fundamental analysis in order to predict the movement in the next period, though completely accurate information on the level of the currencies cannot be predicted for the future in general. Same goes for the other relevant currencies listed at the exchange rate lists of each of the banks, as are the Swiss Franc, Australian and Canadian Dollar, and other.
Fluctuating foreign exchange rates are directly dependable from the data published, mainly by the central banks and by the economic and political developments in the countries. But, what draws particular attention in the past year is the prices growth, i.e. high inflation, not only in the European countries, but around the whole world (with certain exemptions where the inflation has not grown drastically, as in Japan, China, Switzerland). Initially, the war conflict in Europa has contributed the European countries to be most affected by the high prices, mainly oil, energy, gas and then it spell over to the prices of food, clothes, services, immovable. The countries are still fighting with the high inflation by increasing the interest rates, which on the other hand draws not only growth of deposit interest rates, but also of credits, which are becoming more expensive and less accessible. Although in the first months of the inflation the growth was considered to be temporary, trajectory and short term event, one cannot claim that the peak of it in some countries is not over yet. Latest data indicate to small percentage reductions, due to the reduction of oil and gas prices (because of the embargo of Europe for the Russian gas) and reduction of the energy price.
You may say that our country, among the European countries, is among those with worse category in relation with the inflation – 17,1%, and the reference interest rate – 5,25%. Hungary is in the worst position with inflation of 25,7% in Jan and interest rate of 13%, while Switzerland with inflation of only 3,3% is among the countries with the lowest inflation in the world and interest rate of only 1% (which was previously most negative -0,75%). Unlike Hungary, where the central banks is among the first to begin increasing the interest rate to follow up the trend of price growth, Switzerland was among the last one which undertook steps for growth and exit from the negative territory of interest rates, but at the same time intervenes at the foreign markets by sale which impacts the movement of the Swiss Franc.
The positive January data in USA (especially the labor market, which is January this year published unemployment rate of 3,4%, i.e. lowest since May 1969) has depreciated the US Dollar relative to the other currencies. But, this is not only due to the tightened monetary policy in the USA and the possibility for growth of one more percentage point of interest rate, but also due to the better position the country is, compared to some European countries, as with UK (which is at the edge of recession) or with Japan, which in spite of the unfavorable economic data maintains ultra free policy with negative interest rate (-0,1%) and China, which in the previous year, 2022, noted growth of only 3%.
Most important question that emerges at each published data (monthly or quarterly) of any economy is whether it will enter the recession, whether it will be mild or deepened, how that shall have impact on the economy and over the financial markets. Expectations are that the inflation rate on global level shall begin to reduce at the global level for this year, interest rates shall rise up to the third quarter, while stabilization of a number of sectors and reaching inflationary targets (2-3%) is expected by end 2024, i.e. in 2025.