Last Updated on: 29th September 2020, 09:03 pm
For most currencies, the spot rate is usually displayed to four decimal places. For certain currencies such as the Japanese yen, it is only displayed to two decimal places.
Trading in the highly liquid forex market, exchange rates tend to be unstable and prone to significant fluctuations.
That volatility might be profitable for speculative investors but can be detrimental for international companies with business lines in foreign currencies.
Negative changes in the exchange rate may erode their profit margins to the point of incurring losses.
Vincent Nyagaka is a Professional Trader, Analyst & Author. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Check out Vincent’s Professional Trading Course here.