Difficult question about Forex/Emerging Mkts

M

Molon Labe

How would I go about speculating on VERY exotic currencies & markets?

For example, the Republic of Macedonia has less than two years to live. In the very near future it will be completely overrun by Islamic fundamentalists, and everything they're trying to build over there will collapse- stock market, currency, etc...

So knowing this, how would I go about shorting Macedonia?

Thanks.
 
Originally posted by Molon Labe
How would I go about speculating on VERY exotic currencies & markets?
More...

Work for a hedge fund that trades currencies. This way the risk isn't yours....
 
Mr Lobe,

The "Easiest" way to play this would be to short some of the emerging market debt and equity funds. Both Emerging market debt and High Yield debt in general took a huge dump this week. So you are clearly on to something. The big problem with this is there is not a lot of float on all the ETFs that ttrade overseas.

The other way that you could do it directly would be in the currency market. I don't know if forward contracts exist for the Macedonian currency, isn't that close to jersey?
 
Molon Labe,

You will have to find a bank that will let you trade the currencies involved. They obviously are not mainstream currencies or you could use the CME futures or one of the FX sites(not that I recommend using them). The problem with banks is that they expect a large account. They are not interested in fooling around with $25,000 accounts. My suggestion would be to ask around at the leading bank in Macedonia, if that is your focus, and also go to some of the moneycenter banks like Citi. Tread carefully.
 
AAA,

Just curiously, can you borrow the cash in Macedonian Dollars (whatever the currency is), convert it to say the Euro or US Dollar and then repay the loan with the depreciated currency?

I know this was popular among institutions when you could borrow in Japan at 1% and Deposit in Treasuries at 5%.

The risk would be that the currency converted to depreciates faster than the borrowed currency. Leading to a keyboard toss for sure.
 
trdrmac,

I really don't know if macedonian currency is convertible or not. If you can't convert it, you can't put on a carry trade. That type of trade was a huge money spinner for hedge funds. Borrow yen and buy us bonds. not so great now, with yen gaining.
 
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