Risks in Forex trading market in Vietnam

Foreign currency trading is increasingly important status in the activity of commercial banks (URBAN COMMERCIAL) Vietnam. However, forex trading activities contain many risks.
Therefore, the measure, calculated to give a solution to reduce risk in the business of banks is very important.



Forex trading: opportunities and challenges

Risk in Forex business in the URBAN COMMERCIAL special risks is Vietnam rates occurs when the open status maintaining bank rate with this type of Exchange. When the exchange rate of foreign currencies that change will lead to damage free share trading software to the Bank. Therefore, the measurement of the level of risk for each individual currency and foreign currency portfolio is the basis for the Bank to put preventative measures in order to reduce the risk of damage.

However, the figures also showed that the Exchange has close relationships with each other, expressing through the USD's correlation coefficients with the Exchange. The dollar is the currency has the lowest correlation coefficient compared to online trading platform of the EUR, JPY, GBP, AUD, CAD ... but have a relatively high correlation coefficients compared with 0.81% coefficient, HKD. In contrast, the JPY has high correlation with all the coins, except the Council of CAD, HKD.

In addition, the fluctuation rate of the USD/GBP reflect inversely correlated relationship, i.e., the correlation coefficients between USD, GBP and USD by-0.12. I.e. If the dollar price rises or GBP going off and vice versa. As such, through the analysis of data correlation can be seen to reduce the risks in online forex trading within the business, banks need to maintain field status (buy) for USD.

In 2007, the volatility of rates shows the correlation of Dong VND for mostly low. The dollar remains the currency has the lowest correlation coefficient compared to the rest of the coins, along with HKD. However, the dollar has an inverse correlation with EUR, AUD and SGD.

This shows the changes in the exchange rate between this currency against each other. EUR has a relatively high correlation coefficient compared to the other coins to get online trading experience  followed by the Aussie. In terms of risk level, in 2007, the Business Council of SGD is still the coin of the lowest risk level, followed by the dollar. Aussie currency has the highest risk level, followed by the Thai baht (THB) with the risks in turn is 3.47% and 3.3%. However, sales for the sale of the coin representing small. Thus, the Bank can reduce the risks when trading currencies.

In 2008, due to the volatility of the exchange rate, most of the large fluctuations in currencies, so the level of risk when trading foreign currencies rise. The evidence is the standard deviation of the EUR 324% increase, the JPY increased more than 114% and the dollar also over 283%.

The cause of the large fluctuations of the exchange rate of the currency was due to the degree of liberalization of capital transactions are relatively high, due to the volatility of capital flows, especially capital flow indirectly have trading shares online influence to the supply and demand of foreign currencies and rates. In 2008, the indirect investment flow has continued to fluctuate, making foreign exchange supply and demand imbalance. This significant increase in capital inflows in the first three months of 2008, putting pressure on prices in VND.

Then, when the world economic situation continued domestic economic difficulties, faced with inflation, soaring trade deficit or the USD discounted signs increase the demand of foreign currencies. The unpredictable fluctuations of the economy and the financial market in the world as well as in the water have negative influence on online options trading to balance the supply and demand of foreign exchange in the country and have an impact on the exchange rate.

The 2009-2010 period, the level of risk of the foreign currencies declining, except copper HKD there risk level increase in 2010. Thus, when considering the level of online trading canada risk that the foreign currency that the URBAN COMMERCIAL business, the dollar is the currency has the largest sales revenues compared with the other coins have the lowest risk level of the transactions of the Bank. EUR, JPY has a relatively high risk. In addition, the GBP, AUD also maintains major risk factor.

The risk assessment for each individual currency that is to consider the open status for each Exchange, the foreign exchange risk was much more chemistry exaggeration. Because of the change in the exchange rate between currencies have an inverse relationship. Therefore, the profit from maintaining open State for this currency could offset the losses due to remain open for other currencies. So, trading risk assessment of Exchange need computer to both categories of Exchange.