Master Of Brutality
This article is a part of "The ABC of Getting Rich" article series. The articles so far in the series:
Monetary market is almost certainly familiar to everyone - you change your capital from gold to currency, or vice versa. If you start changing your money from currency to gold and back for some time, you'll eventually end up with nothing. Where does your money disappear? In to the pockets of the monetary market traders. This two-part article tells, how the money of others end up in your own pocket.
Perhaps you have about 5-10 gold already gathered. What can you get with it? Not very much. In the real life, you'd probably put your money in a bank to get interest (ok, possibly not in the current IRL economy situation - but you get the drift), or perhaps invest in stocks. In eRepublik, the correct place is the monetary market.
The monetary exchange in eRepublik is slightly less chaotic
There are parallels between investing in stocks IRL and operating in currency markets in eRepublik:
-Don't do investments, if you don't know what you're buying.
-Don't invest more than you can afford to lose.
-Putting all your money in one basket is risky.
When you keep these things in mind, it's relatively safe to operate within the monetary market and you'll get losses only if you're foolhardy.
Possibly the optimal amount of gold for operating in the monetary market is from 10 to 60 gold. Why? 10g is enough for starters, but when you reach about 60g, you may have more profitable options - options introduced later on in this guide. Eventually you'll also get bored of it and seek other things to do
In its simplicity the deal is as follows: at first, you observe the monetary market rates for buying a selling a currency. The recommended exchange rate defined by the game itself is rubbish, ignore it and never consider it: it's as broken as the other economy calculations in the game. The only thing that matters are the real buying and selling offers of currencies. Let's observe e.g. the Japanese yen: at the time of writing, the rates are as follows.
1 JPY = 0.034 gold
1 gold = 30.384 JPY
If you do a quick calculation, you'll notice the conversion rates don't match completely - there's a small marginal: 1 gold/0.034 gold/USD=29.4 JPY). Gaining wealth in the currency exchange is based on this marginal. If you sell 5 gold at 30.3 JPY and someone buys your offer, you'll get 151.5 JPY. Then you can sell your 151.5 JPY at rate 0.034: when someone buys that offer, you'll end up with 5.15g. So you've just made 0.15g with a simple procedure, basically 6 USD! That's about the same as a 3 skill employee would make in a day.
What about the risks?
In the example above, if you had invested your 5 gold, you would've got those 151.5 JPY. Then you would've tried selling them at 0.034, but for some reason or another the rate would drop to 0.033 and no one would buy your offer at 0.034. If there's only a small amount of money for sale at 0.033, you'll probably get your offer sold a bit later. However, if the rate starts staying there at 0.033 and you decide to change your offer rate to 0.033 accordingly, you'll only get back about 4.99g! However, similarly if the rate suddenly rose to 0.035, you'd gain even more
This is possible in eRepublik, too
Look out for political takeovers or other political unrest. A political takeover may mean the decline of the exchange rate of that currency. Running companies might not be possible due to hostile taxes, salaries are paid in gold, money is issued to devaluate the currency. No one will need the currency and there will be a lot of extra cash on the market, so the rate goes down! This has happened e.g. in Norway and Croatia. Now with the citizenship module the risk is smaller, but it still exists for some countries. Losing regions is generally bad for the currency, due to less companies needing the currency. On the other hand, gaining them tends to increase the value, especially when dealing with regions with high resources or areas with large numbers of companies.
If you decide to invest in foreign currencies, be sure to read their media articles closely. This will help you avoid unnecessary risks and anticipate rate changes. When you buy the currency of a country, you're effectively investing in its currency system. Think about it!
To be continued in the next part!