Forex trading involves buying and selling foreign currencies to take advantage of changes in exchange rates. It is a constantly changing market. For example, on October 12, 2025, the Japanese yen fell 1.9% against the dollar following elections in Japan. The Central Bank then warned of excessive volatility in the market.
The Forex market operates 24 hours a day during the week. It allows speculation between currency pairs without owning the asset. In India, foreign exchange reserves fell to $699.96 billion, reflecting external pressure on its currency.
On the other hand, since July 2005, the renminbi (RMB) is no longer pegged to the US dollar. Although the People’s Bank of China frequently intervenes to prevent sharp fluctuations, the RMB may appreciate or depreciate in the medium to long term. In addition, the Chinese authorities could ease restrictions and reduce their participation in the foreign exchange market in the future.
Forex trading
The foreign exchange market, known as forex or FX, is where currencies from around the world are traded. Factors such as interest rates, inflation, and economic news can alter the value of one currency against another or against a basket of currencies.
The US dollar, euro, yen, and pound sterling are considered reserve currencies. Governments hold them for their stability and use them to settle international debts. Since World War II, the dollar has been the primary global reference currency.
The Federal Reserve’s weekly Exchange Rates report provides daily data on the value of the dollar against about two dozen currencies. It also includes three comparative indices: one general, one for advanced economies, and one for emerging markets.
The forex market is one of the largest in the world. Transactions can be made on a spot basis or through derivatives. Several companies offer execution services in major currencies, covering products such as spot currencies, options, forward contracts, and NDFs (Non-Deliverable Forwards).
Stock markets
In 2024, the world’s major stock markets (including the United States, Canada, Europe, Japan, and Australia) continued to reach historic highs. The S&P 500 index led global gains with a year-on-year increase of 23%, reflecting investor optimism.
The weight of the “Magnificent Seven,” the big tech companies, declined slightly. Even so, they contributed half of the S&P’s gains, compared to 63% the previous year. Inflation gradually receded, prompting central banks to cut interest rates. This decline favored a “soft landing” for the global economy and sustained the appetite of retail investors, who remained active in stocks and options despite geopolitical uncertainty.