FIN+385+Topic+4+Foreign+Exchange+Market

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1、TheForeignExchangeMarketTopic4FIN385Chapter6AgendaWhatistheforeignexchangemarket?Typesofforeignexchangetransactions.Methodsusedinforeignexchangeratesandquotations.Sourcesofinformationabouttheforeignexchangemarket.1.Whatistheforeignexchangemarket?1.1Keyte

2、rmstolearn–foreignexchange,foreignexchangetransaction,foreignexchangemarket.1.2Geographicalextentoftheforeignexchangemarket.1.3Functionsoftheforeignexchangemarket.1.4Participantsintheforeignexchangemarket.1.Whatistheforeignexchangemarket?6-41.1KeytermsTh

3、eForeignExchangeMarketprovides:thephysicalandinstitutionalstructurethroughwhichthemoneyofonecountryisexchangedforthatofanothercountry;thedeterminationoftherateofexchangebetweencurrencies,andalocationwhereforeignexchangetransactionsarephysicallycompleted.

4、1.Whatistheforeignexchangemarket?6-51.1KeytermsForeignexchangemeansthemoneyofaforeigncountry;thatis,foreigncurrencybankbalances,banknotes,checksanddrafts.Aforeignexchangetransactionisanagreementbetweenabuyerandasellerthatafixedamountofonecurrencywillbede

5、liveredforsomeothercurrencyataspecifieddate.1.Whatistheforeignexchangemarket?6-61.2GeographyTheforeignexchangemarketspanstheglobe,withpricesmovingandcurrenciestradingsomewhereeveryhourofeverybusinessday.Asthenextpptwillshow,thevolumeofcurrencytransaction

6、svariesacrosstheglobeasthemajorcurrencytradingcentersopenandclosethroughouttheday.Exhibit6.1MeasuringForeignExchangeMarketActivity:AverageElectronicConversionsPerHour6-701.Whatistheforeignexchangemarket?6-81.3FunctionsoftheFXMarketTheforeignexchangemarke

7、tisthemechanismbywhichparticipants:transferpurchasingpowerbetweencountries;obtainorprovidecreditforinternationaltradetransactions,andminimizeexposuretotherisksofexchangeratechanges.01.Whatistheforeignexchangemarket?6-91.4ParticipantsintheFXMarketTheforei

8、gnexchangemarketconsistsoftwotiers:theinterbankorwholesalemarket*(multiplesof$1MMUSorequivalentintransactionsize),andtheclientorretailmarket(specific,smalleramounts).01.Whatistheforeignexchangemarket?1.4ParticipantsintheFX