The UAE is undoubtedly regarded as a commercial hub in the Gulf Region and
not, it also set to emerge as a foreign exchange trading hub in the region,
said a senior official of ADS Securities, the Abu Dhabi based Forex and
commodities and trading platform.
Claus Nouveau-Nikolajsen, ADS Securities, Head of Sales, GCC & MENA,
states: “The UAE has been at the forefront of financial industry development in
the GCC and offers the most conducive environment for the growth of the forex
marketplace and infrastructure. Trading of both major and emerging market
currencies in the UAE is on the rise, and with international trade growing
rapidly, the need for currency management will only increase. The
expected upgrade of the UAE to emerging market status by index provider MSCI
will have a significant impact on investment flows into the country, which in
turn will also boost the country’s forex market.”
He states that as the markets continued to experience record instability, a
number of investors had become cautious and stay away from traditional
investment instruments like real estate and equities. This has made Forex
trading a top choice among investors in GCC. With market volatility going at an
all time, exchanging currencies is now seen as perhaps the only investment
class that allows opportunities for investors to gain the returns they are
aiming for.
“Since the launch of our platform we
have had a rapid rise in the number and range of investors trading forex. In
particular, regional traders realise that they can create alpha with a local
player offering some of the best prices and spreads in the world without the
additional costs associated with overseas firms who only have sales operations
based in the Middle East,” he added.
A number of driving elements, including economic uncertainties around the
world, have led to the exponential growth of the Forex market which has a $4
trillion trade a day volume – this is three times as much as the rest of the
financial markets combined.
Over the past few weeks, several major currency pairs have performed quiet
exceptionally well. The most widely traded pair Euro/Dollar pair recently set
its record of its highest volatility since the peak of the financial crisis in
the late 2008. “Intra-day volatility today has grown to extremely high levels
and as global economic worries show no sign of abating, this is expected to
continue,” pointed out Nikolajsen.
Currency trading in the GCC region has responded well to global trends. The
continuous downfall of the US dollar has caused businesses in the region to pay
close and thoughtful attention to their exposure to currency risks. “Over the
last few years, the US dollar has been comparatively stable, so there was
little need for currencies pegged to the US dollar to manage their treasury positions.
Recent volatility and decline in liquidity across traditional markets have
created a real need for sophisticated currency management,” Nikolajsen said.