How to make money on Zimbabwe currency rates?
April 10th, 2009
There has to be some way to make HUGE amounts of money by playing the currency and inflation in Zimbabwe as it inflates at unbelievable rates versus the falling but more stable US dollar. Any suggestions?
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I start by saying that I am not making a recommendation. But, generally speaking if your sentiment is that a currency is increasing against another then you would buy the increasing currency while selling the other (in your case USD). When you trade a currency you trade in pairs (USD/EUR, CHF/GBP, etc.). The problem you are going to run into is there not being a very liquid market for the currency of Zimbabwe; since in order to complete the transaction the market will have to present a participant that disagrees with you and is willing to sell the Zimbabwe currency and buy the dollar (in your example) The downside of making huge amounts of money in the currency market is that it is (a) based on leverage/gearing at ratios much higher than in the stock-markets and (b) it is a zero-sum game, whereby one participant wins and the other loses. Therefore, if you win you can win big, but if you lose, you can lose more than you have. There are 8-10 major currency pairs that are traded. I'd start by getting a mock acct on fxonline and test out your ideas.
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