Interesting news about the Dubai financial crisis. One day they are the successful business center of the Middle East and the next they are asking for a six month moratorium on their debt. For those whose business is Forex trading the questions about the Dubai financial crisis are how much money is owed and to whom? The investment arm of Dubai, Dubai World, is asking not to pay interest on $59 billion for six months. Dubai, unlike its neighbors, is not a large oil producer. It acts as a financial center with interests in tourism and trading. Thus Dubai does not have pool of oil to sell to pay its debt. So, how do you trade the Dubai financial crisis? What is your Forex strategy for the Dubai financial crisis and potential for world wide market meltdown?
Dubai is one of the seven United Arab Emirates. Dubai World is the country’s investment arm. Things have been slowing down in Dubai for a year with expatriate Indian workers returning to India as jobs are lost. The financial world was shocked, however, when Dubai world asked for a 6 month moratorium on its $59 Billion debt the other day.
Regarding Forex trading, what will the Dubai financial crisis mean? There are all sorts of opinions about market melt downs because of the amount of debt that countries have taken on to fight the recession. In Forex trading the yen fell after the Dubai news. One can assume that the concern is that Japan, as an exporting country, will suffer as countries such as Dubai run out of money to borrow and quit buying cars and electronics.
World banking centers such as London have issued statements regarding the Dubai economic crisis. If banks in Great Britain suffer because of loan defaults in Dubai will Forex trading in the British Pound be affected?
As in most times of world financial crisis there are signs again of a “flight to the dollar.” Will the dollar benefit in Forex trading because of the Dubai financial crisis? Despite all of the problems with the US economy, US financial institutions, US treasuries, are still seen as safe havens in times of trouble. A sound Forex strategy in the days ahead will need to look at who the winners will be and who the losers will be if there are more debt moratoriums like those in Dubai. A sound Forex strategy needs to look at the next days and weeks, but also, the next years.
The other question is how long with the Dubai financial crisis affect Forex trading? Will the Dubai financial crisis cause the world financial markets to slowly but surely unwind or will stability be maintained? Whatever the eventual outcome of the Dubai financial crisis we can be assured that Forex trading will reflect the concerns of the hour and the eventual outcome.
Forex strategy and successful Forex trading has to do with keeping up with the events of the times and understanding how billion dollar ripples in the Dubai financial crisis will affect the multi trillion dollar Forex market.