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Some company wants to sell large quantity of CNY and buy USD on Forex. Let current currency value is 1 CNY = 0.14 USD at the time moment on Forex. When company sell large quantity of CNY, money supply of CNY will increase and currency value of CNY will decrease. And thus company can't sell large quantity when currency value is 1 CNY = 0.14 USD. Is it true? Or is it possible that company will sell large quantity of CNY when currency value is 1 CNY = 0.14 USD ? How does it work?

Thanks.

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    $\begingroup$ Are you asking about CNY specifically, or currency sales in general? CNY has some capital control rules - I don't know if the government will let you sell a "large quantity" $\endgroup$ Commented May 8, 2023 at 10:52
  • $\begingroup$ @user253751 I'm asking about currency sales in general. $\endgroup$
    – Mike_bb
    Commented May 8, 2023 at 14:55
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    $\begingroup$ you can sell EUR if you match with someone who wants to buy EUR at the same price $\endgroup$ Commented May 8, 2023 at 15:08

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FX in general is very different from CNY.

FX trading is decentralized and takes place through transactions at brokerages, over-the-counter (OTC) markets, or via the interbank system, rather than centralized exchanges.

CNY on the other hand is RMB that's traded in mainland China. Similar to PTAX in Brazil or MOEX in Russia, CNY is predominantly exchange traded on CFETS. It's really too different to make meaningful comparisons between the way CNY trades and say GBPUSD or EURUSD.

Even for standard OTC FX trading it is difficult to make comparisons because there exist numerous trading platforms like FX Connect from State Street’s GlobalLink, EBS, now part of the CME or Refinitiv. The aforementioned platforms offer quotes from numerous institutions in one place. E.g. Refinitiv states that it connects you with 16,000+ counterparties and 4,000+ institutions (not all will be for FX trading though). Euromoney routinely ranks these platforms by market share. While Refinitiv is the biggest, it largely depends on regions as well. E.g. 360T is very strong in the DACH region. FXGO has a good user base with corporations. However, there are also single bank platforms like Deutsche Bank Autobahn. According to Euromoney, DB has a ~14% market share in FX trading. Bloomberg offers FXGO and so forth.

Bottom line is that no trade itself really impacts aggregate money supply.

  • Firstly, because of the sheer size of the FX Market. According to the latest BIS data, FX spot trades are ~ $2.1 trillion per day in April 2022. The word yard means a billion in FX trading slang and it's not just JPY that trades in these sizes. It is unlikely a single company will really make a big enough trade that it makes a real difference.
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  • Secondly, because there is no overall market. A single trade always mainly only impacts the respective venue you trade with.
  • Thirdly, each trading venue / system offers different ways one can trade. E.g. Bloomberg's FXGO offers an always on, executable stream for FX spot trading, with bid ask spreads depending on the trade volume. Some platforms offer RFQ (request for quote) trading, where you simple state your intent to trade and request a quote for the desired amount and many other ways.
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