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The repo market might be one of those obscure things to forex traders. But, recently, the chaos in the repo market created ripples all over.
In fact, from a spot forex trader’s perspective, the impact of the repo markets was much less muted on the currencies.
One of the reasons the repo markets made news back in September was due to the similarities to what we saw before the 2008 global financial crisis. So, understandably, the news spooked investors briefly.
As a forex trader, it pays to understand what the repo market is all about and why you should, at the very least, have a basic understanding of what it is and how it works.
What is the Repo Market?
The repo market is a place where vast amounts of cash are exchanged for collateral. By some estimates, the amounts exchanged, primarily between large institutions for short-term financing, are close to $3 trillion.
Simply put, as an institution, if you are short on c...
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