Unpredictable currencies making foreign exchange profitable

Foreign exchange trading is becoming increasingly profitable because of the volatile markets, with many betting accurately on falling currencies.

New figures released by Dutch bank ABM Amro have revealed expectations that currency swings will continue on their downward spiral from record highs helped to deliver a 32 per cent gain in the final months of 2008, as the foreign exchange markets continued to see plenty of activity.

The global recession has resulted in a major transformation in the world's financial markets, reports Bloomberg, with currency swinging from high to low in a matter of months.

In the UK, the pound has fallen sharply against both the euro and the US dollar in recent months as confidence in the British economy slumped.

However, recent research from the CBI has suggested the UK could begin to see its economy growing again by the spring of 2010, meaning the foreign exchange markets could yet begin to turn in a different direction.

Earlier this month, research from Greenwich Associates suggested global foreign exchange trading would begin to shrink in 2009, following the gains of 2008.

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By Paul Jarvis