Tuesday, April 29, 2008

Substituted Speculation

I’m currently watching The Explainer rerun right now where Ricky Carandang’s explaining how speculating works on the worldwide market. I think a better local example on how speculation works is when people buy & sell US dollars. In a similar scenario, people with funds would buy US dollars from the Forex stores at the mall or from travelers or OFWs in the hopes of waiting for the US rate to go up. Increasing buying of US dollars would also bring up the price of US dollars since the US dollars demand would go up, creating a bandwagon effect.