Big Mac Index

The Economist, one of the leading economics magazine introduced Big Mac Index to compare purchasing power of various currencies around the world by comparing price of a standard Big Mac.

McDonald's is an international fast food chain and it has 35,000 restaurateurs 119 countries around the world.

Indian version of Big Mac is Maharaja Mac

So value of US$ is near about Rs 20 in terms of real purchasing power.

Many of the engineers and migrants from Punjab flaunts about their salaries in US and UK. Many of my friends are getting $3000 to $4000 a month. By converting US$ 4000 into INR 4000*60 (Approx) = Rs 2,40,000, this looks good money. But to know

how much you can actually buy, simply divide it by 3, so it Rs80,000.

So a person making $4000 in USA has an equal standard of living as a person earning Rs 80,000 in India.

Forex Trading

 Forex Trading takes place in ‘Forex Market’.

 Forex market operates for 24 hours a day and 5 days a week! Why 24 hours?

Simply because of the time differences in different parts of the world!

 Forex market is also known as currency market, as currencies from all over the world are traded; it is the largest market in the world only because of the sheer volume of transactions!

 Forex market is not a physical market – it is a term used to denote the worldwide ‘market’ where currencies from all over the world are traded – it is not limited by geographical constraints.

 Any person from any country can trade in the forex market; participants can be international banks, companies and individuals engaging in hedging or speculative transactions.

 Forex markets operate on ‘Over the Counter’ (OTC) form – just like a medical store – over the counter – ask for the currency which you want and pay according to the existing rate of the currency.

 Then when you want to sell them – take ‘em back and sell ‘em over the counter!

 The currency rates or forex rates differ every day and sometimes also during a day and exchange rates for different currencies are different and depend on various factors.

 Investors, traders, hedgers, speculators trading the forex market actually want to take advantage of the fluctuations of the exchange rates or simply put the currency’s rate.

 Exchange rates depend on various factors such as level of economic activity of a country, its GDP, its share market activities, political stability or instability etc., speculators look at all of these factors and make their own predictions and put their money on particular currency.