DUBAI (Commodity Online): UAE is emerging as a major foreign exchange trading center as markets experience unprecedented volatility, and investors shy away from traditional investment options like equities and real estate in Gulf Co-operation Countries (GCC), according to ADS Securities, Abu Dhabi based forex and commodities firm.
Claus Nouveau-Nikolajsen, ADS Securities, Head of Sales, GCC & MENA said,
“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.”
Economic uncertainty and unprecedented currency fluctuations have led to exponential growth in the global forex market whose daily turnover is estimated at US$4 trillion, three times as much as the rest of the financial markets combined. Over the past few weeks, many major currency pairs have seen exceptional levels of trading. Euro/Dollar recently recorded its highest volatility since the height of the financial crisis in 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.
Forex trading in the GCC has responded to global trends. The weakness of the US dollar has made businesses in the region pay close 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.
"In response to the needs of the market, ADS Securities has developed a trading platform, which can provide businesses and investors in the GCC exceptional control over their currency trading and the ability to benefit from market fluctuations. ADS Securities works with some of the world’s largest and best known liquidity providers to offer clients market leading prices and spreads," according to ADS Securities press release.
As the GCC forex market grows, Nikolajsen feels that the UAE is set to emerge as the hub of forex trading in the region. “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.”
ADS Securities is a Principal Sponsor of the inaugural FX Invest Middle East conference taking place in Dubai on 31 October, 2011. Nikolajsen will be speaking about approaches for maximising returns in the forex market at a panel discussion at the event titled ‘The search for alpha: Investment approaches for today’s market’.
