Unlike a stock exchange, forex trading isn’t a centralized market  A stock exchange is a centrally organized market with standardized products in which traders from all over the world participate. Foreign currency, on the other hand, is traded over the counter (OTC) and mainly electronically on the OTC market, i.e. bilaterally between two parties., and yet it is the largest and fastest part of the financial market. On average, around 7.5 trillion US dollars are traded in this way every day. This is shown by a study on global foreign currency flows published by the Bank for International Settlements (BIS) in December 2022. In this interview, Currency Trader Nils Scheidegger explains how telephone foreign exchange trading works at PostFinance and when foreign exchange transactions are worthwhile for companies.

Nils, you carry out foreign exchange transactions for PostFinance customers by telephone. How does forex trading work, and what is forex?

Forex  The word forex is formed from the two terms foreign and exchange. are foreign currency exchanges  Foreign currency exchanges are foreign means of payment denominated in foreign currencies. and forex trading  At PostFinance, anyone can buy or sell foreign currencies themselves in e-finance or simply instruct a currency trader to do so by telephone. If you want to trade foreign currency yourself, you will need a foreign currency account. – the process of exchanging one currency for another, such as between two parties. Prices change in an instant when a new event occurs somewhere in the world. This is what makes foreign exchange trading so exciting, but also challenging.

Does the forex market have opening hours, and do these coincide with your working hours?

The forex market is open around the clock on weekdays. The foreign exchange market is closed on weekends. At PostFinance, you can make foreign exchange transactions by telephone from Monday to Friday between 8 a.m. and 5 p.m. However, depending on the volume, limited order transactions may also be triggered at night.

What do you do as a currency trader?

The first thing I do in the morning is get an overview and see what volume of payments there is. From 8 a.m., my four colleagues and I take orders from PostFinance customers over the phone and then process them. This means that we buy or sell currencies immediately or on a specific date. I also attend meetings and work on projects.

How does telephone trading work for customers?

As an example: an SME calls and wants to buy the equivalent of 300,000 francs in euros immediately. We quote the current price for the spot market transaction, and if the business customer agrees, the transaction is carried out for them. We debit the amount in francs from the account and credit the corresponding amount to the SME’s foreign currency account in euros. Spot market transactions of less than 250,000 francs can also be carried out conveniently in e-finance. Forward and swap transactions are possible only by telephone.

Which currency pair is most popular with companies?

Due to Switzerland’s geographical location and with the EU as its main trading partner, EUR/CHF is naturally the most traded pair in our country.

Which currency would you favour as a company?

All companies in Switzerland have to deal, directly or indirectly, with foreign currency risks. That’s why it’s essential to address this issue. There is no single currency that is ideal for everyone. However, there are always opportunities to be seized.

From what amount is forex trading worthwhile for companies, and which forex trading strategy would you recommend?

The higher the volume, the better the conditions. From an equivalent value of 250,000 francs, you benefit from the best prices. However, you can also exchange small amounts without any problems. The strategy depends on demand and the number of transactions. Companies that only need to pay an invoice in a foreign currency from time to time can simply do so through their normal business account. International companies, on the other hand, should use foreign exchange transactions to hedge against price fluctuations.

What do you find most fascinating about your job?

Events such as the discontinuation of the SNB’s minimum exchange rate or surprise interest rate hikes, as was the case in June 2022, can be turbulent. I find it fascinating to observe how quickly the market reacts and how prices change immediately. As there’s always something happening somewhere, it’s always interesting.

Do you also trade in foreign currency privately?

Only when I go on holiday. Then, of course, it’s fun dealing with a currency. I also have a foreign currency account in euros, as I often travel in the eurozone and can pay directly with my euro account card.

Read the blog post “Hedging against exchange rate fluctuations” to find out what foreign exchange transactions are available, the most common currency pairs and how companies can use foreign currency to bring security to their cash flow.