Libertex, a retail contracts-for-differences, FX and cryptocurrency broker, told Finance Magnates this Wednesday that it will be launching new currency pairs on its Trading Platform . The new currency pairs will see the broker focusing its efforts on the Chinese and Turkish markets.
The firm informed Finance Magnates that it would be launching a USD/CNH (US dollar / Chinese yuan) currency pair. The firm is also supporting traders who focus on the European market by introducing an EUR/CNH (Euro / Chinese yuan) currency pair to trade.
Libertex’s move to include the yuan is a reflection of China’s growing economic clout in the world’s financial markets. In 2015, the yuan gained official status as a reserve currency and, since then, it has grown to become the third largest reserve currency in the world.
This development, combined with the huge growth the Chinese economy has experienced over the past thirty years, means the interest in trading yuan on the FX markets has increased. Libertex appears to have recognized this, and its customers will now be able to trade it.
Shorting the lira
If Libertex’s decision to include the Chinese yuan in its service offering was driven by ‘positive’ factors, such as Chinese economic growth, its announcement today that it will also be offering the EUR/TRY (euro/Turkish lira) currency pair was driven by decidedly negative factors.
Political instability in Turkey over the past couple of years has driven traders to consistently short the lira. On Tuesday, the currency lost 3.5 percent of its value after the country’s president, Recep Tayyip Erdogan, appointed his son-in-law as finance minister.
Erdogan has been largely responsible for the lira’s decline in value. He has dramatically altered Turkey’s political system in a move that, opponents say, sets him up as a quasi-dictator.
Aside from this, Erdogan’s fiscal policy and his meddling in Turkey’s central bank’s policy have also put off investors. The president is strongly opposed to the bank increasing interest rates - a move which could stimmy the tide of inflation that has seen the lira depreciate by 20 percent in value this year alone.
Turkey’s citizens may be suffering, but Libertex users may be hoping for more trouble in the country. If the lira continues to decline in value, then Libertex’s clients will be well set up to short-sell the currency and make some cash.
