By now you probably have or think you have a fairly base level knowledge from our forex trading blog. However, I am going to play the devils advocate on this forex trading blog post. I am going to teach you what blocked currencies are. PS, you can forget EVERYTHING you just learned about forex for this one.
Base level knowledge of the forex market is that you buy or sell currencies against each other to either make or lose money. That is the kindergarten explanation, but that is all we need to start this forex trading blog post. Blocked currencies cannot be traded because there are no exchange rates associated with them. Most likely their government has blocked the trading of their currency. Some reasons may be because they want to keep out capitalism, or that the primary goal on the government is the control the currency. Some of the times, governments want total control of the currency for political reasons. Do ANY of these reasons make blocked currencies sound appealing? No, I didn’t think so. Investors stay far away from blocked currencies as they should.
One of the biggest issues with blocked currencies is that the country responsible has very little power in international trade. Without being a player in the international market, imports and exports would be a non issue.
Another issue that has risen up from this is the establishments of back markets. If there is enough demand to get a currency that is blocked, to a non blocked form, a black market will do the transaction. Obviously the sketchy level is high, and I think that this is the last resort move for most people.
