› Currency market - a type of bazaar model

Currency market - a type of bazaar model

4.07.2018, 15:27

While the interpretation of the foreign exchange market as a bazaar seems to be apparent, the metaphor "bazaar" illustrates a distinctive market conceptualization. The metaphor interprets the highly complicated and vague concept of the foreign exchange market to a particular place in space in which physical goods change the owner. Viewing the currency market as a bazaar, currency trading on the exchange means simply a certain kind of the market (that is, "places where people purchase and sell money"). The currencies traded on the market can be compared to any other kind of commodity, such as fruit or old car. One trader of the foreign exchange market addresses the similarity, citing that "this is the buy and sale of a commodity… the currency markets echo this model." Another trader concurred with this statement, believing that "the currency is a commodity, the chairs, the refrigerators are sold in the same way… If it were feasible to drive the refrigerators via the KYIVB screen, you might be trading them now."

currencies
Source: The Telegraph


Of all metaphors of the foreign exchange market, the metaphor "bazaar" indicates certain fundamental conditions and particular models of human behavior that are suitable and coherent with these conditions. In the bazaar, people meet with people as bazaars are places where sellers meet buyers. The prices of goods in the market are not defined objectively with the assistance of external mathematical algorithms, but instead are the upshot of social interaction between the buyer and the seller.

"There are no regulations; there is no right price; the right price is determined as the price at which you made a deal," according to one trader. Furthermore, sellers and buyers, in the market, do not set isolated prices alone, but in interaction and trading with other traders. Before purchasing, customers in the bazaar can first ask and inspect with other sellers: "Customers who go to the market, go to a couple of stores… they compare prices and then go forward with one of them," cited by another trader. Sellers in the market, in turn, must align their price with the market price and consider the data, information, and behavior of other sellers. "He comprehends that the other guy sells two dollars worth of plates, so he set the price to one dollar ninety cents, and all his customers will come back to him," according to the currency market trader.


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