Another name for FOREX is GAMBLE.
Why would anyone want to gamble away his hard-earned money unless he is a tycoon with too much money to throw. I hope my readers are wiser than this. Forex is meant for hedging, typically used in commercial arrangements. It is NOT meant for speculative aka gambling tools (for individuals).
Tycoon Oei Hong Leong is pursuing his case against banking giant Goldman Sachs over "exotic" currency trades that resulted in losses of US$34 million (S$47 million).
The saga dates back to 2013, when Mr Oei entered into leveraged trades with the US bank involving the Brazilian real and the yen.
Mr Oei said that although he is a sophisticated investor, he was not familiar with the Brazilian currency. However, he was told that the real was stable as it is anchored to the US dollar like the Hong Kong dollar.
Goldman Sachs also allegedly said that real-yen trades were liquid and could be executed and unwound at any time, and that they behaved very like US dollar-yen trades.
Rather than falling as Mr Oei had expected, the yen strengthened against the real after then-US Federal Reserve chairman Ben Bernanke raised the possibility on May 22, 2013, that the central bank's money-printing programme would be scaled back. The news led to a flight of capital out of emerging markets.
On June 17, Mr Oei closed the trades, suffering a loss of 4.231 billion yen. After deducting the 1.055 billion yen received as premiums on the trades, he was left in in the red to the tune of 3.175 billion yen. This is the equivalent of the US$34 million that he was claiming.
Mr Oei said he would not have entered into these trades if the risks had been highlighted correctly. He had filed suits both in Singapore's High Court and New York's Supreme Court against the bank's parent, Goldman Sachs Group. These suits are no longer active.
