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Sir can u explain me the process of speculation in currency and interest rate risks
Speculation is when you buy currency in the hope that the value will increase and you can therefore sell at a profit. (Or when you sell currency in the hope that the value will decrease and you can later buy at a profit). You can speculate (i.e. gamble) on the currency itself or using currency futures (which are explained in my free lectures).
Speculation on interest rates involves buying and selling interest rate futures – these are also explained in detail in my free lectures.
Financial managers do not speculate. They ‘gamble’ on futures in order to hedge the risk on the underlying transaction.
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