Page not found - Forex Trading in Dubai https://www.forextradingdubaiuae.com/ Forex Trading in Dubai Thu, 07 Mar 2024 07:29:14 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.3 https://www.forextradingdubaiuae.com/wp-content/uploads/2019/04/cropped-forexing-840x420-1-1-32x32.jpg Page not found - Forex Trading in Dubai https://www.forextradingdubaiuae.com/ 32 32 Best Forex Brokers in UAE and Dubai https://www.forextradingdubaiuae.com/best-forex-brokers-in-uae-and-dubai/?utm_source=rss&utm_medium=rss&utm_campaign=best-forex-brokers-in-uae-and-dubai Sat, 09 Sep 2023 09:09:58 +0000 https://www.forextradingdubaiuae.com/?p=292 Last updated on March 7, 2024Welcome to the UAE and Dubai, where the best forex brokers are available for your […]

The post Best Forex Brokers in UAE and Dubai appeared first on Forex Trading in Dubai.

]]>
Last updated on March 7, 2024

Welcome to the UAE and Dubai, where the best forex brokers are available for your next trade. Here you’ll find everything from great customer service to fair pricing on currency pairs. With so many options in this region of the world, it can be hard to know which broker is right for you. Keep reading as we break down some of our favorite brokers!

Best Forex Broker in UAE

If you’re looking for the best Forex broker in UAE, we’ve got you covered.

There are many Forex brokers in Dubai, Abu Dhabi and Sharjah but not all of them are the same. Some of them offer better services than others so it’s important to choose wisely when choosing one that is right for your needs.

Best Forex Broker in Dubai

If you are looking for the best Forex broker in Dubai and UAE, then this is your one stop shop. We have handpicked some of the best Forex brokers in Dubai and UAE based on their trading conditions, spreads and fees.

  • Alfa Forex Broker
  • FXTM Broker
  • CMC Markets

Top 3 Forex Brokers in UAE

If you’re deciding on the best Forex broker in UAE and Dubai, here are our top 3 picks:

  • Alpari (UAE)
  • XM (UAE)
  • OANDA (Dubai)

Best forex brokers in UAE and Dubai

If you’re looking for the best forex brokers in UAE and Dubai, we’ve got you covered. We’ve compared the leading companies on their rates, spreads and trading platforms before coming up with this list.

  • Alfa Financial Services
  • FXTM
  • OANDA (formerly known as OpenFX)

Conclusion

We hope that you find this article helpful and informative. We have compiled a list of the top 3 forex brokers in UAE and Dubai to help you make an informed decision when choosing one for yourself.

The post Best Forex Brokers in UAE and Dubai appeared first on Forex Trading in Dubai.

]]>
Unraveling the Intricacies of Forex Broker in Dubai and UAE https://www.forextradingdubaiuae.com/unraveling-the-intricacies-of-forex-broker-in-dubai-and-uae/?utm_source=rss&utm_medium=rss&utm_campaign=unraveling-the-intricacies-of-forex-broker-in-dubai-and-uae Sat, 09 Sep 2023 09:06:13 +0000 https://www.forextradingdubaiuae.com/?p=290 Last updated on March 7, 2024Trading in foreign currencies, also known as forex trading, has gained overwhelming popularity globally and, […]

The post Unraveling the Intricacies of Forex Broker in Dubai and UAE appeared first on Forex Trading in Dubai.

]]>
Last updated on March 7, 2024

Trading in foreign currencies, also known as forex trading, has gained overwhelming popularity globally and, more specifically, in the United Arab Emirates (UAE). This blog post unravels the nuances of forex trading through your trusted forex broker in the emirates of Dubai and UAE at large.

An Introduction to Forex Trading

The foreign exchange (Forex) market continues to thrive as the largest liquid financial market globally, trading approximately $5.3 trillion every day. Interestingly, in Dubai and the broader UAE, forex trading has turned into an increasingly significant venture, gaining ground among the multitude of investment avenues.

The Role of Forex Brokers

Forex brokers come into the picture as the middlemen facilitating the buying and selling of different currencies. They offer a trading platform to traders and sell currencies at an asking price. Whether you’re in Dubai or any other region within the UAE, the importance of the broker you choose cannot be undermined.

Forex Brokers in Dubai and UAE: A Closer Look

Dubai, a leading financial hub in the Middle East, invites various forex brokers thanks to an impressive regulatory environment, which UAE continues to uphold. The Central Bank of UAE and the Dubai Financial Services Authority (DFSA), the two main regulators, ensure the smooth operation of forex trading.

Choosing the Right Forex Broker in Dubai and UAE

Entering the forex market without appropriate guidance can be a risky gamble. Hence, choosing a reliable forex broker becomes paramount.

Regulation: An authorized broker brings reliability and peace of mind. In Dubai and UAE, look for brokers regulated by the DFSA or Central Bank of UAE.

Trading Platform: A user-friendly platform that provides comprehensive tools, charts, and indicators contributes to better decision-making.

Customer Service: A broker with professional customer support quickly resolves any trading issues that might arise.

Trading Costs: Compare various broker costs including spread, funding & withdrawal fees among others.

Education & Training Materials: New traders will find it beneficial to have rich resource materials and dummy accounts to learn.

Prominent Forex Brokers in UAE and Dubai

Following are some of the reputable Forex brokers in Dubai and the UAE:

IG Markets: Globally recognized, the DFSA regulates it and offers extensive educational resources, with a user-friendly platform.

HYCM: A broker with a rich legacy, it has multiple trading account types to cater to varying trading preferences.

SwissQuote Bank Ltd: Renowned for its positive bank-level security, it operates under the supervision of the DFSA.

Stepping into Forex Trading in UAE

Forex trading can be fruitful for those who take the time to learn the market’s intricacies and choose a dependable broker. Dubai and wider UAE present many opportunities for traders with their robust financial infrastructures.

Following due diligence while selecting a forex broker, understanding the trading platform’s nuances, and persistent education about the dynamic forex market can make your journey in the forex world a prosperous one.

Conclusion

In essence, being successful in Forex trading in Dubai and the UAE is not a chance event but a result of careful planning, strategy development, and most importantly, choosing the right Forex broker. With the continuous growth of this market in the region, the sky is truly the limit for forex traders in the UAE.

The post Unraveling the Intricacies of Forex Broker in Dubai and UAE appeared first on Forex Trading in Dubai.

]]>
Forex Broker in Dubai https://www.forextradingdubaiuae.com/forex-broker-in-dubai/?utm_source=rss&utm_medium=rss&utm_campaign=forex-broker-in-dubai Sat, 15 Apr 2023 09:53:11 +0000 https://www.forextradingdubaiuae.com/?p=281 Last updated on April 16, 2023Forex trading is a risky or danger business for most of people. Because it involves […]

The post Forex Broker in Dubai appeared first on Forex Trading in Dubai.

]]>
Last updated on April 16, 2023

Forex Broker in Dubai
Forex Broker in Dubai

Forex trading is a risky or danger business for most of people. Because it involves the risk of losing money.  But, still, there are many people around the world who wish to trade in Forex. And they create the biggest economic market a worth of 7 trillion dollars. In UAE forex trading is the highest trade in which people invest their capital. In western states also want invest their capital. Forex trading in the UAE is equally popular as in most of the western countries. Here, in this article, we will review the Forex broker in Dubai and forex trading. And we will tell you that how you can start trading online.

Forex Brokers in Dubai UAE

There are hundreds of Forex brokers in Dubai. Many of these Forex broker in Dubai follow with overseas regulators from Europe and Australia. But these brokers are considered unsafe and less trustworthy. But you don’t need to worry there are a few UAE regulated broker as well. They are more reliable and trustworthy. Now a day people of UAE believe on forex trade. You can choose to trade with any of these local traders. The trader who is new to Forex trading should try our demo account. Or Forex Managed Accounts.

Forex broker in Dubai, UAE

In the United Arab Emirates, the expat investors and Emirati investors are doing remarkably well with Forex trading. Online Forex trading in the UAE has become rather democratic among traders with higher risk appetence. So this is one of the main reasons for Forex Brokers in Dubai to have register with UAE authorities. The people of UAE like to trade in forex and spare a portion of their money to trade online. Some UAE local residence does forex as a part time job. But other do that as a full time job.

Interestingly, a large number of investors are making returns that are execute the underlying assets markets. The key to succeeding in Forex trading in UAE lies in rendition the currency price movements. The price of the currency changing due to some financial news and global events. As a trader you need to keep eye on the currency price changing and Global news. And also you need to keep track of the data releases from different central banks. A person can make money easily in Forex trading in UAE.

One thing is clear; one can make money by trading currencies. But the new entrants to the market face an amazing related of options, platforms, and nomenclature, so here’s a quick explanation to help understand Forex trading in UAE.

Forex brokers in Dubai, UAE

When you are going to select the best Forex broker in Dubai, then you must consider so many things. Some important feature to consider are – trustworthiness of the Forex Brokers in UAE, the safety, and security of funds, and it protect your whole sedimentation procedure and distributed (broker fees) involved. It is always better to avoid new Forex brokers who do not have an established track record of a few years. You can select regulated Forex brokers in Dubai who are operating from last 5 to 6 years.

First of all you need to check the broker review on the internet before you finalize to invest with one of them. The brokers complying with European or UK controller are considered trustworthy as they abide with demanding regulations. There are some western Forex agents who have opened their business office in the United Arab Emirates and registered with UAE regime to provide their services.

We as a Forex brokers in Dubai have people who can speak Arabic and English languages and local telephonic support. We are quite assured of our services and trading features offer a free demo trading account. If you start trading with us; then you get a chance to know the trading platform and all trading features by using a demo account. You can then easily convert your demo to a real trading account. Sign up for Demo Account.

Best Forex Broker in Dubai, UAE

The last Forex Show was arranged in Dubai, on 14th of March this year. 15 brokers have taken part in this Expo; there were 20 verbalize and 1600 attendees.  We have won the best Forex Broker award during this event. We hold the regulated Forex trading license in Dubai.

Which Forex broker is regulated in UAE?

There are many Forex brokers operating in UAE to supply Forex trading. The regulators sighted Forex brokers in UAE are Dubai Financial Services Authority (DFSA) and Central Bank of UAE. You can find the list of the the broker on the authority website.

There are overseas brokers register in Europe, Australia, and they offer their services in the UAE. As these brokers are not register with UAE authorities, there for UAE traders do not trust these brokers for trading. The overseas brokers have high fees that’s people don’t like it.

The post Forex Broker in Dubai appeared first on Forex Trading in Dubai.

]]>
Forex trading in Dubai Legal https://www.forextradingdubaiuae.com/forex-trading-in-dubai-legal/?utm_source=rss&utm_medium=rss&utm_campaign=forex-trading-in-dubai-legal Wed, 25 Jan 2023 07:18:26 +0000 https://www.forextradingdubaiuae.com/?p=273 Last updated on April 12, 2023Is Forex trading in Dubai Legal? It is one of the usually asked questions by […]

The post Forex trading in Dubai Legal appeared first on Forex Trading in Dubai.

]]>
Last updated on April 12, 2023

Forex trading in Dubai Legal
Forex trading in Dubai Legal

Is Forex trading in Dubai Legal?

It is one of the usually asked questions by all the citizens of Dubai and UAE. Because each one wants to know –Is Forex trading in Dubai legal? The answer is very simply; that is yes. It is 100 percent legal to trade Forex in Dubai as well as in entire UAE. You should take care of your local tax obligations. There are a number of Forex trader firms have offices in Dubai. And they operate while meet the terms with UAE regulators. Since the rules as well as the regulation of UAE keep changing. There for you need to consult a local forex Consultant like Us. That is for detailed advice on legal aspects of Forex trading in Dubai.

The controlling authority for this type of services and connected industries is DIFC (Dubai International Financial Centre). There are a number of Forex player working with DIFC, which can be found at DIFC website public register.

Is forex trading in Dubai legal

Yes currency trading is absolutely 100% legal in Dubai. Or simply we say that forex trading in Dubai is legal. Actually since forex trading became totally legal in Dubai. So more and more retail investors who are living in this country. They invest their money in this very money making as well as dynamic field.

UAE also has two financial free zones in which one is DIFC in the Emirate of Dubai. DIFC provide forex trading license in Dubai. And Abu Dhabi Global Market (ADGM) in Abu Dhabi. They are offering human activity of Forex Trading, CFD and other online non-banking financial trading. Dubai Financial Services Authority which is in DIFC is an authority clearly built to regulate forex brokers. It also regulates companies performing non-banking financial activities in DIFC.

It is without doubt legal to socio-economic class in forex through with local brokers regulated by SCA, Central Bank or other regulatory authorities. Pertinently, any natural or legal person willing to offer such non-banking financial services within UAE must set up an organization in the country either in the mainland or in any financial free zone as referred above, in accordance with the laws and regulations of the country. UAE strictly prohibits any organization dealing in forex or another online trading without having a proper license in UAE.

This is according to the Article 6 of the Law number 13 of 2011 regulating Financial Activities in Dubai. They cannot make any property without UAE permission. Ergo, the company to provide Forex and CFD services in UAE must primarily obtain a legal document from SCA, DIFC, ADGM or any other regulated free zone offering such activities.

Is Forex trading in UAE is difficult

I think that Forex trading is difficult, particularly nowadays.

You may think that it is because it’s complex to have a winning plan of action. Or because you need $1 million to make a unobjectionable income. Or because you should have some unconditioned skills… it’s not that.

I know that this sounds like one of those quotes that will take you nowhere, but “you are your only limit”.

What is the Reason for forex trader failure

Many people believe that traders fail because they don’t have a good plan of action. Or because they are not skillful. Or some people think forex trading in Dubai is not legal. And it is a scam and Brokers are there to take your money and run. But this is totally wrong.

I have been account manager for more than 200 clients in this field. And I have been trading Forex since 2015. Trust me if I tell you that the main reason for traders to fail. Is that they make a scientific discipline mistake sooner or later.

  1. They have a worse day and they decide to open more trades to recover the losses;
  2. They made a mistake, they feel stupid, and they decide to increase the size to recover the loss of that stupid mistake;
  3. They are in a good winning streak and decide to increase the size because it’s a good period;
  4. They think that they can sustain a bigger drawdown so they decide to increase the risk;
  5. They say “one last time with this risk, then I will stick to the plan”;
  6. They think “it can’t always go down”.

I can really write more than 100 reasons on this topic, but I think I made my point.

The post Forex trading in Dubai Legal appeared first on Forex Trading in Dubai.

]]>
How does CFD trading work https://www.forextradingdubaiuae.com/how-does-cfd-trading-work/?utm_source=rss&utm_medium=rss&utm_campaign=how-does-cfd-trading-work Mon, 29 Apr 2019 12:28:12 +0000 https://www.forextradingdubaiuae.com/?p=205 Last updated on April 13, 2023The main purpose of this post is to know How does CFD trading work. If […]

The post How does CFD trading work appeared first on Forex Trading in Dubai.

]]>
Last updated on April 13, 2023

How does CFD trading work
How does CFD trading work

The main purpose of this post is to know How does CFD trading work. If a stock has an ask price of $25.26 and the trader buys 100 shares. The cost of the transaction is $2,526 plus commission and charges. This trade needs at least $1,263 in free cash at a traditional broker in a 50% margin account. While a CFD broker formerly required just a 5% margin, or $126.30. A CFD trade will show a loss equal to the extent of the spread at the time of the transaction. So, if the spread is 5 cents; the stock needs to gain 5 cents for the position to hit the break even price. You will see a 5 cent increase. If you own the stock out right. But would have paid a commission and incurred a larger capital outlay.

If the share rallies to a bid price of $25.76 in a traditional broker account. It can be sold for a $50 gain or $50/$1263=3.95% profit. Nevertheless, when the national exchange reaches this price; the CFD bid price may only be $25.74. The CFD profit will be lower because the trader must exit at the bid price. And the spread is higher than on the regular market. In this example, the CFD trader earns an estimate $48 or $48/$126.30=38% return on investment. The CFD broker might also require the trader to buy at a higher initial price; $25.28 for example. Even so, the $46 to $48 earned on the CFD trade denotes a net profit. While the $50 profit from owning the stock outright doesn’t contain commissions or other fees; putting more money in the CFD trader’s pocket.

The Advantages: Larger Leverage

CFDs offer higher leverage than traditional trading. Average leverage in the CFD market is subject to regulation. It once was as low as a 2% margin (50:1 leverage). But is now limit in a range of 3% (30:1 leverage) possibly will go up to 50% (2:1 leverage). Lower margin requirements mean less capital outlay for the trader/investor, and bigger potential returns. But increased leverage can also magnify losses.

Many CFD brokers provide products in all the world’s major markets, allowing around the clock access.

Certain markets have rules that prohibit shorting; require the trader to borrow the tool before selling short. Or have different margin requirements for short and long positions. CFD instruments can be short at any time without borrowing costs for the reason. That the trader does not own the underlying asset.

CFD brokers offer several of the same order types as traditional brokers including stops; limits as well as contingent orders like “One Cancels the Other” and “If Done.” Some brokers offer guarantee stops; that charge a fee for the service or recoup costs in different way. Brokers earn money when the trader pays the spread and most do not charge commissions or fees of any kind. To buy, an investor must pay the ask price, and to sell/short, the trader must pay the bid price. This spread may be small or large depending on volatility of the underlying asset and fix spreads are often accessible.

How does CFD trading work

Certain markets require minimum amounts of investment to day trade; or place limits on the amount of day trades that can be made within certain accounts. The CFD market is not bound by these restrictions and all account holders can day trade if they want. Accounts can usually be opened for as little as $1,000, although $2,000 and $5,000 are common minimum deposit requirements.

Brokers currently offer stock, index, treasury, currency, sector and commodity CFDs; so speculators in various financial vehicles can trade CFDs as an alternative to exchanges.

While CFDs provide an attractive alternative to traditional markets, they also present potential pitfalls. For one, having to pay the spread on entries and exits eliminates the possible to profit from small moves. The spread also decreases winning trades by a small amount compare to the underlying security; and will increase losses by a minor amount. So, while traditional markets expose the trader to dues, regulations; commissions and higher capital requirements, CFDs trims traders’ profits through spread costs.

Also please note that the CFD industry is not highly regulate; and the broker’s credibility is base on reputation; longevity, and financial position rather than government standing or liquidity. There are outstanding CFD brokers, but it’s important to investigate a broker’s background before opening an account.

How does CFD trading work

How does CFD trading work is fast moving and necessitates close monitoring. There are liquidity risks and margins you require to maintain; if you can not cover reductions in values; your provider may close your position; and you will have to meet the loss no matter what subsequently happens to the underlying asset. Leverage risks expose you to bigger potential profits but also greater potential losses. Even though stop loss limits are available from many CFD providers; they can not guarantee you won’t suffer losses; especially if there’s a market closure or a sharp price movement. Execution risks also may happen due to lags in trades. For these reasons, they are ban and unavailable to residents in the U.S.

How to Trade in Financial Markets in Dubai, Online business in Dubai

To now How does CFD trading work and advantages to CFD trading include lower margin requirements. easy access to global markets, no shorting or day trading rules and little or no dues. However, high leverage magnifies losses when they happen; and having to pay a spread to enter and exit positions can be costly; when large price movements do not occur.

The post How does CFD trading work appeared first on Forex Trading in Dubai.

]]>
How to Trade in Financial Markets in Dubai https://www.forextradingdubaiuae.com/how-to-trade-in-financial-markets-in-dubai/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-trade-in-financial-markets-in-dubai Thu, 18 Apr 2019 14:09:28 +0000 https://www.forextradingdubaiuae.com/?p=201 Last updated on April 14, 2023If you are new to trading an you don’t know How to Trade in Financial […]

The post How to Trade in Financial Markets in Dubai appeared first on Forex Trading in Dubai.

]]>
Last updated on April 14, 2023

How to Trade in Financial Markets in Dubai
How to Trade in Financial Markets in Dubai

If you are new to trading an you don’t know How to Trade in Financial Markets in Dubai. Then your first thought will be Where should I start?. Many new traders may be over whelmed when they open their demo trial account; for the first time and might try to run before they can walk. Understanding the basics of trading is an essential starting point and in this the two part article. We will cover the key characteristics of trading. The various financial instruments we can trade, the concept of going long and going short. And also trading platforms, starting investment and what it takes to succeed.

What is the difference between investing and trading?

Investing and trading are two dissimilar ways that we can profit from the financial markets. Some people new to the world of finance can be confused over what is the difference between the two. Here we will define what we mean for each.

What is investing in Financial Markets in Dubai?

The aim of an investor is to gradually build up their net worth. That is by purchasing and holding a portfolio of stocks; bonds, mutual funds or other investable instruments.

Investments are often held for year or more. Investors take advantage of certain perks such as dividend payments, coupon payments and interest during this period. When the markets fall in value; numerous investors will hold on to their investment in the expectation that the price will rebound. Investors are therefore looking at the long term value of their investment. And are not very concern with the day to day volatility in the market.

Investors take physical ownership of the instruments they have bought. So for example, if an investor purchases shares in a company. They will physically own a portion of that company and will receive a certificate of ownership. A shareholder can carry certain privileges such as voting rights on certain corporate actions; as well as profit from dividend payments on the profits.

How to Trading in Financial Markets in Dubai?

On the other hand if you look for, How to Trade in Financial Markets in Dubai; is the more frequent buying and selling of financial devices with the aim of outperforming buy-and-hold investments. There is no ownership of the underlying asset so traders are only speculating on the price movement.

Traders can therefore get profit from falling markets as well as rising ones. A trader can purchase an asset just like an investor. But traders also have the ability to sell an instrument without owning it. This is recognize as short selling and this is why many people are particularly attract to trading. It is a key concept to understand and is a main reason why traders can outperform buy-and-hold investors.

While investors are often satisfied with annual returns of up to 15% depending on the risk element of the investment; some traders look for making returns that are a multiple of this. As they can benefit from the dips in the market; as well as the increases because of the ability to short sell.

The length of time a trader has a position open for may range from seconds to years. This time frame is completely up to them and relates to their objectives; account size, risk profile and time they can commit to trading. Trading requires a more hands on approach. Than investing and regular assessment of market conditions is important when traders have open positions. Forex trading license in Dubai

What and How to Trade in Financial Markets in Dubai?

A financial tool is a trade able asset of any kind i.e. It is an asset we can purchase or sell at a monetary value on a financial market.

Examples of financial instruments include currency pairs; (i.e. the foreign exchange/FX market), commodities; stock indices and the stock of companies (also recognized as individual equities). As we do not take ownership of these assets; when we are trading we are actually speculating on the price of futures contracts for FX tools; and Contracts for Difference (CFDs) for shares, commodities and stock indices. The value of these contracts is directly related to the price of the underlying instrument. So any movement in price of the physical asset will see a parallel move in the price of the contract.

Forex trading in Dubai

The reason we trade futures contracts and CFDs; is mostly due to the ease at which they can be traded and their cost-effective nature. For example, if we physically own a share in a company; we may be liable for additional charges such as stamp duty in certain countries. There is not such cost with futures contracts and CFDs. CFDs can be sold short as well. This is something that other types of instruments are forbidden from doing.

If you want to know more about How to Trade in Financial Markets in Dubai you can contact us on 00971 55 6690 851

The post How to Trade in Financial Markets in Dubai appeared first on Forex Trading in Dubai.

]]>
Currency hedging in Dubai Or Hedging physical business in Forex https://www.forextradingdubaiuae.com/currency-hedging-dubai/?utm_source=rss&utm_medium=rss&utm_campaign=currency-hedging-dubai Tue, 16 Apr 2019 10:20:30 +0000 https://www.forextradingdubaiuae.com/?p=190 Last updated on April 11, 2023Any business that has dealing in overseas market is open to such Currency hedging in […]

The post Currency hedging in Dubai Or Hedging physical business in Forex appeared first on Forex Trading in Dubai.

]]>
Last updated on April 11, 2023

Currency hedging in Dubai
Currency hedging in Dubai

Any business that has dealing in overseas market is open to such Currency hedging in Dubai; or more commonly known as Forex exposure. There may be other kinds of exposure together with commodity risk, Interest rate risk, wage inflation etc. Un-hedged exposure of FX can affect the balance sheet or profitability, which can create cash flow and operational problems. Hedging decreases a firm’s exposure to unwanted risk. This helps in sustaining profits, reducing volatility and ensuring flatter operations. Currency hedging in Dubai is a very effective way to protect against currency volatility; and restrict or minimize loss of any disadvantageous movement in currency.  Given recent foreign exchange volatility; this article looks into currency hedging in Dubai mechanisms; and how they can support importer and exporter when trading.

How can currency hedging in Dubai help importer as well as exporter

One of the major risk factors involved in operating an Import or Export business is that; while your Purchase or Sales is in progress; the value of currency may change relative to the value of the U.S. dollar; (assuming Import or Export is with USA from Europe). This means that your business is open to risk in terms of adverse movement in EUR against US$.

What does mean Currency hedging in Dubai?

In very simple terms, Currency hedging in Dubai is an act of entering into a financial contract; in for protecting against anticipated or unexpected changes in currency exchange rates. Currency hedging in Dubai is used by businesses to quell risks they encounter when conducting business internationally.

The idea of Currency hedging in Dubai is the use of various financial instruments; like Forward Contract and other Derivative contracts, to manage financial risk. It involves the description of one or more financial instruments; (usually a Bank or an Exchange) as a buffer for potential loss.

Let us look How Currency hedging in Dubai helps business

Assume a firm receives an export order today with the delivery date being in 3 months time. The contract is worth, say, US$100,000. At the time the contract is placed, the EUR is said EUR 0.90 per US$. Hence the value of the order, when placed, is EUR 90,000. But suppose that the exchange rate changes significantly among the date; when the order is received and the date the order is paid for; (which we will assume is one month after the delivery date). The exchange rate of the EUR & US$ is at 0.87 on payment date. Which means that the firm receives only EUR 87,000 rather than EUR 90,000. This will result in loss of EUR 3,000 for the exporter. To make sure against this happening, the firm can, at the time it receives the order, hedge the currency risk.

hedging in forex market
hedging in forex market

There are many ways to hedge currency

If you are an importer and need to buy merchandise abroad; one currency protection method is to simply open an account in the country you are importing from. When the exchange rate is positive; send U.S. dollars to your foreign account for deposit. The bank changes them into the local currency. Now the currency is locked into the other country’s currency and ready to spend.

Most of the Banks offer currency forward contracts; which are essentially an agreement to exchange certain amounts of dollars; for foreign currency on a future date. This lets business to lock in an import purchase or export sale at the current exchange rate; guaranteeing your transaction at the agreed upon price. Of course, if you are Importer and if the EUR appreciates against US$ afterwards, you can’t profit from it; you are latch into an exchange rate. But you have protected your business from the risk of a enfeeble of EUR against US$.

Futures contracts

Similar to forward contracts, futures are a commitment to buy currency; in the future at an agreed upon rate based on current exchange rates. You should purchase currency futures contracts from an exchange such as ECE. Futures contracts have very important advantage over forward contracts. There is a secondary market for them; so you could opt to sell your contract before the term is up; so if you change your mind or your business needs the money. On the other hand, futures contracts usually lets a range of final exchange prices rather than a fixed point; so you may not get the exact exchange rate which you want; when the contract hits its maturity date. Also, the contracts are only offer in fix amounts; which may make it difficult to hedge the exact amount you want through futures.

You can also check our Forex trading in Dubai or online business in Dubai

Nevertheless, as a business house, one needs to understand the Cost of Hedging. An important drawback to note about contracts and options is that; each of these currency hedging strategies comes with payments and commissions charged by the bank; exchange, or other party administering the hedging vehicle. Weigh those costs to your business in values whether Currency hedging in Dubai makes economic sense or not.

The post Currency hedging in Dubai Or Hedging physical business in Forex appeared first on Forex Trading in Dubai.

]]>