Save a few dollars under the mattress is a form of savings in foreign currency that has passed from generation to generation. But the exchange of currencies as a formof investment is more complex and sophisticated than that.
To do so on a large scale there is the Forex market (in English Foreign Exchange) specialized in the exchange of currency between investors from around the world. However, before entering it, it is necessary to know its characteristics and risks to avoidjeopardizing your heritage, experts agreed.
“Is a completely electronic market and operates 24 hours a day through financial centers around the world, so it has no physical operation place (because everything isdone via the Internet),” explained director General of Forex and Currency ResearchCenter of the company Alpari, Roberto Pasalagua currency operator.
However, because of the volatility that characterizes this market, its aims are primarily speculative, i.e. many people invest with the expectation of obtaining juicy profitsin a short time; However, because of the volatility that characterizes it, “as well as you can win, you can lose”, warned the managing partner of the financial company Privest, Antonio Díaz Bonnet.
To participate it is necessary to go to a broker (operator) that provides the user access to an electronic platform and that, for each operation that the user makes, it charges a Commission. The amount of opening of contract may vary, but there are companies that ask for a minimum investment of $500.
In general terms, specialists identify two types of risks by investing in Forex: the market, which refers to the possible losses by the volatility of currencies, as well as the problem posed by investing through a company that is not regulated by the Mexican authorities.
“In Mexico, this market is not regulated, which means that in the country there is noauthority that can support the participants in case of need it”, explained Mauricio Sotomayor, Manager of private banking at Actinver brokerage.
The companies that offer this service to Mexican investors are only representativesof foreign companies that are not financial institutions, according to information from the National Commission for the protection and defense of users and Servicios Financieros (Condusef).
Alpari, for example, is a company that offers its platform to Mexican participants, but that has no basis in Mexico. Here they only have a call canter through which technical support, non–financial, local investors and Latin America that have access to its platform, explained Pasalagua.
This service is not offered by financial institutions, so the operation runs 100% on behalf of the investor, without support or advice.
“There is an international body that regulates all activities worldwide Forex market since it is very big, but there are some agencies such as the Commodity Futures Trading Commission in the United States that regulates the market for United States andCanada, and the Securities and Futures Associations in London for Europe,” according to information from Condusef.
Since the companies that offer this type of operation are not financial institutions competition from the Condusef or from another body is not to determine their Constitution and operation of law and therefore the defence of the interests of clients whomake investments with these companies is not possible.
“The Forex market is one of the more speculative markets within the financial sector,and any news on the economic, political or social field can affect a currency‘s valueeither in favour or against,” said Díaz Bonnet.
Moreover, as in any speculative investment, there are no guaranteed returns.
Participate in foreign currency is not bad if the risks are known and, in the specific case of the currency, avoid investing their savings or their capital assets, added Pasalagua.
What you should consider
Representative in Mexico will not necessarily be responsible for the contract (although charges commissions for the operation). Check who is responsible according to the contract.
If you decide to participate, it is very important to learn about the history of the company with which you are going to operate, if the company is subject to any regulatory body in the country where it is based.
Ask for the experience of people serving you and the services that they provided. Usually only provide technical support to carry out transfers of money or use of the platform, do not make investment recommendations.
If possible you request references, in order to verify their work and duration with other customers.