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Forex Response to Peace in Gaza
The news out of the Middle East is promising. It appears that people are finally getting tired of Hamas. A telling bit of information was the estimate that Hamas invested about $100 million in tunnels under the Gaza border with Israel in order to kill and kidnap Israelis. They did this while unemployment in Gaza runs at about 50% and many projects that could have helped the people of Gaza went undone. Negotiations are going on in Cairo with the PLO leader, Mahmoud Abbas, as a key figure in working out a deal that disarms Hamas and gives Gaza a functional airport and a port. The bottom line is if that the fighting stops things will not only get better in Gaza but also in the rest of the Middle East. Our direct interest is in the Forex response to peace in Gaza.
What Will Happen and What Do Traders Anticipate?
Peace in Gaza as a prelude to a wider peace in the Middle East is attractive economically for the entire region. If you trade Middle East currencies you know that several trade in low volume and poor liquidity. Much of this is due to the fighting in the region and general civil unrest. A solid peace in Gaza followed by reconstruction in Gaza and prosperity in Gaza would be a lynchpin for economic success throughout the Middle East. The vision of peace and profits is attractive but all too many times before the parties have left the negotiating table and resumed fighting. Thus many traders do not anticipate peace. They will take a contrarians approach to thoughts of a positive Forex response to peace in Gaza.
How to Trade Profitably
Things may, in fact, settle down in Iraq when a more inclusive government is in place and tribal leaders forsake the ISIL and take part in rational governance of the country. The Kurds may finally get a reasonable degree of autonomy. And the example of peace may encourage the warring factions in Libya to settle their scores politically and not with firearms. In the meantime there are very cheap currencies in the Middle East. The currencies of Yemen, Syria, Libya, Lebanon, and Iraq can be had for a song, so to speak. For a very reasonable amount in dollars, Yen, Euros, British pounds or Swiss francs on could purchase a nest egg of any of these currencies and hold them until the Forex response to peace in Gaza and elsewhere multiplies their values. A prime candidate is Iraq, which sits on at least 140 billion barrels of oil reserves and probably more. Gaza currently uses the currencies of other nations and the Palestinian West Bank primarily uses the Israeli new shekel. If Israel, the West Bank and Gaza become business partners instead of adversaries the Forex response to peace in Gaza could be substantial for the shekel, Egyptian pound and Turkish lira. If you trade minor foreign currencies you will trade them primarily against the dollar.