Interbank currency trading
Explain, why do most interbank currency trading globally include the U.S. dollar?
Expert
Globally, trading in currencies is in contrast to the common currency having the international appeal. That currency has been the U.S. dollar form the end of World War II. Though, Japanese yen and deutsche mark have started to be utilized much more as international currencies in the current years. Also, trading could be exceedingly burden and is also complex to manage in case every trader makes a market against another currency.
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Presently, spot exchange rate is $1.50/£ and three-month forward exchange rate is $1.52/£. Three-month interest rate is 8.0% per annum within the U.S. and 5.8% per annum within the U.K. Suppose that you can borrow as much as $1,500,000 or £1,000,000.
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