The rapid development over recent years of the forex industry in Cyprus appears to be beneficial for the island’s whole economy since the coronavirus epidemic little affects its operations, Phileleftheros reports.
Forex companies now constitute a large segment of the Cypriot capital market, with data from the Cyprus Securities and Exchange Commission showing that a total of 241 Cyprus Investment Services Firms were active in February. Of these, 149 were in the forex market and 92 trading in traditional investment products.
Foreign Exchange (Forex) refers to the over-the-counter foreign exchange market in which the foreign currencies of the world are traded. It is considered the largest and most liquid market in the world.
Coronavirus does not seem to affect forex companies, at least when compared to others, with insiders explaining that this endurance is because of the sector’s nature. Despite the crisis, transactions are carried out online and in foreign currencies so operation is normal, one also said.
However, with the whole business spectrum affected by the spreading epidemic the purchasing power worldwide shrinks and the number of transactions also decline.
Nonetheless, the Ministry of Finance is now betting on these companies to maintain a flow of tax revenue at a time when most sectors are flagging. At the same time, the sector’s companies are among the most important buyers of real estate or tenants of top-rentals in coastal Limassol.
In addition, they offer very good salaries to employees, something that benefits consumption which has also been affected in recent weeks. And forex companies also generate work for other sectors such as law and accounting firms.
However, the Securities Commission closely monitors these companies so as to ensure the effective protection of investors and the healthy development of the capital market.
At a time of large fluctuations such as the prevailing one, when the psychology of investors is also affected, bie problems could arise – especially with non-professional investors.
By Demetra Landou