BRIC currencies take major hits – implications for Forex Brokers

Emerging market currencies have weakened dramatically against the green back during the last year, what does this mean for brokers

Emerging market currencies have weakened dramatically against the green back during the last year, what does this mean for brokers and net deposits?

The big four nations which make up the BRIC’s have been under the lime light as the global economy is still facing difficulties with inflation, the Euro zone crisis and thought of a double dip recession.

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The BRIC’s have been responsible for a new wave of prosperity and hope for developed markets, as investors look for growth opportunities in the 4 nation pact wich comprises of the new wealth of the world. China has a million millionaires.

Three of the 4 currencies have declined over 12% during the last 12 months.

For Forex Traders from India, Russia and Brazil this means extra funds to deposit margin.

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  • A client looking to open a $10k account from India needs to deposit INR 544,810.67 this figure was around INR 47,000 last year. GDP per capita is around $3600.
  • A client from Russia would need to deposit RUB 323,310.70, the same account would be opened with RUB 270,000 in September 2011.
  • A client from Brazil trading on a $10k account would transfer BRL 20,311, in May 2011 the same client would send BRL 16,000.

For Chinese traders government restrictions on the Yuan are favourable as the currency only fluctuates 1% from the official exchange rate.

Forex Magnates research team estimates China and Russia to be the leading BRIC nations with active participation in the FX markets, with over 35,000 traders. Indian traders have been gradually opening up to the $5 trillion a day spot FX market however due to government restrictions on foreign out flows Indian residents have found difficulties.

Brazilian retail investors have been slow to trade in margin FX. The BM&F BOVESPA is now the 5th most liquid futures exchange in the world and the regulator has been focusing on educating local residents on domestic products. The CVM – Comissão de Valores Mobiliários, Brazilian regulator does not regulate FX as an asset class and marketing or promotion is forbidden onshore.

FX and CFD Brokers need to react to the depreciation in currencies and offer country specific offers to compensate investors differentiation.

For client numbers, marketing initiatives and trade volumes in these and other markets contact Forex Magnates.


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