Basic Introduction to Forex (Foreign Exchange)
Here is one example of the basis of forex in terms of weakness and strengthening of other currencies. There was a news that there was a famous convection company in 1998 bankrupt due to the strengthening of the dollar against the rupiah. And the value of this strengthening is very high, around 350.52% and this incident occurs in the event of an economic crisis in Indonesia or a crisis of confidence to zero so that the rupiah which closed at IDR. 4,850 / US dollar in 1997 slid rapidly to the level around IDR 17,000 / US dollar on January 22, 1998.
Why is a convection company bankrupt ? because the company has debt in US dollars . If in 1996 we assumed that the convection company had a debt of $ 100,000.00 (IDR. 485,000,000) then how much would the company have to pay if the debt was due in 1998 ? can be calculated, which is approximately IDR. 1,700,000,000, – or more than 3 (three) times the original debt if it is converted . So we can know that when we have debt in the form of dollars and when the dollar has strengthened, we can be sure that our debt will increase.
Well, if we are a businessman and want to have debt, especially debt in the form of dollars, then at least we must be able to predict how the condition of the exchange rate of the dollar against the rupiah. Why does this need to be done ? none other so that we don’t have the same fate as the convection company . And how can we predict this exchange rate ? We can use fundamental analysis and technical analysis to do this . And we don’t need to worry because these two analyzes can be studied by anyone.
If my advice is even better if we don’t have debt, especially in the form of dollars when running a business. So it makes you sleepy ….
But if you have no debt but have a dollar or other foreign currency then you can exchange it and make a profit. And currency exchange activities like this are called the ForEx (Foreign Exchange).And if we are able to predict currency movements well, it is likely that we will be able to get greater profit opportunities, of course, to do forecast activities such as this, we need fundamental analysis assistance and technical analysis .