The market where different countries' currencies are exchanged for one another is called foreign exchange, or forex or FX. The world's biggest and most liquid financial market is this one. Banks, businesses, and private individual’s trade, acquire, and speculate on currency pairs within the foreign exchange market. These exchanges may take place to support global trade, protect against currency risk, or profit from changes in exchange rates, among other purposes.
GCC Foreign Exchange Market Driving Factors and Challenges
Forex activity is rising as new sectors emerge and draw foreign investments as GCC countries continue to diversify their economies away from oil dependence. One of the main drivers of the market's expansion is this, together with the strengthening trade ties with other nations. Furthermore, changes in oil prices may have an effect on the GCC's currencies because they tend to increase revenue for these nations, which could strengthen their currencies. Furthermore, the GCC region's rapidly expanding tourist industry, especially in nations like Saudi Arabia and the United Arab Emirates, generates a significant quantity of foreign exchange and so favourably impacts market growth. Additionally, the GCC governments' decisions on fiscal policy, such as adjustments to tax rates, public spending, and government borrowing, can have a big effect on the value of their own currencies.
Oil exports play a major role in the economies of the GCC. Changes in the price of oil can have an effect on trade balances and foreign exchange reserves, which can affect the stability of the corresponding currencies. The goal of several GCC nations is to diversify their economies away from the oil industry. Economic diversification is a process fraught with difficulties since it requires moving away from revenue streams heavily dependent on oil, which affects exchange rates. Because of the region's vulnerability to geopolitical instability, investor confidence may be impacted, and currency prices may fluctuate. Events in the geopolitical sphere can also affect the mood of the foreign exchange market. The foreign exchange market of the Gulf Cooperation Council (GCC) may be impacted by shifts in the global economy, including shifts in interest rates and the economic policies of major economies. The area is a part of the larger global economic environment.
Impact of COVID-19 on GCC Foreign Exchange Market
The GCC nations mainly depend on oil exports, and the COVID-19 epidemic significantly reduced the world's oil consumption. The Gulf Cooperation Council (GCC) had economic difficulties as a result of this and a pricing war amongst major oil-producing countries, which may have affected the GCC countries' currencies on the foreign currency market. Increased volatility was observed in global financial markets, especially foreign exchange markets, as a result of the pandemic's uncertainties and economic disruptions. Currency values may change in reaction to shifting market sentiment and economic situations. To lessen the pandemic's effects, governments in the GCC area may have undertaken a variety of economic stimulus programs. The foreign exchange market's trading patterns and currency values may be impacted by such actions.
GCC Foreign Exchange Market Key Players
The market study provides market data by competitive landscape, revenue analysis, market segments and detailed analysis of key market players such as major key players are Barclays, BNP Paribas, Citibank, Deutsche Bank, Goldman Sachs, HSBC Holdings plc. , JPMorgan Chase & Co., The Royal Bank of Scotland, UBS AG, Standard Chartered PLC, State Street Corporation, and XTX Markets Limited and various others.
GCC Foreign Exchange Market Segmentation:
By Counterparty: Based on the Counterparty, GCC Foreign Exchange Market is segmented as; Reporting Dealers, Other Financial Institutions, Non-financial Customers.
By Type: Based on the Type, GCC Foreign Exchange Market is segmented as; Currency Swap, Outright Forward and FX Swaps, FX Options
By Region: This research also includes data for Oman, Qatar, Saudi Arabia, UAE , Others.
This study also encompasses various drivers and restraining factors of this market for the forecast period. Various growth opportunities are also discussed in the report