Money Market Nd Forex Market


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its all about money market and Forex market..pls read it for refernce....

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Money Market Nd Forex Market

  1. 1. Money Market Presented By:- Atul Banga Laxminarayan Katti Preeti Haridas Meghna Sah Chandan Handique Kishore Modi Nidhi Gupta
  2. 2. The Definition <ul><li>As per the RBI “center for dealing mainly of short term character, in money assets; it meets the short term requirement of the borrowers & provides liquidity to the lenders </li></ul><ul><li>Money market refers to the market for short term assets that are close substitutes of money, usually with maturities of less than a year. </li></ul><ul><li>It meets the short-term requirements of borrower and provides liquidity or cash to the lenders. </li></ul>
  3. 3. The Players - Money Market <ul><li>Reserve Bank of India </li></ul><ul><li>SBI DFHI Ltd (Amalgamation of Discount & Finance House in India and SBI Gilts in 2004) </li></ul><ul><li>Commercial Banks, Co-operative Banks and Primary Dealers are allowed to borrow and lend. </li></ul><ul><li>Specified All-India Financial Institutions, Mutual Funds, and certain specified entities are allowed to access to Call/Notice money market only as lenders </li></ul><ul><li>Individuals, firms, companies, corporate bodies, trusts and institutions can purchase the treasury bills, CPs and CDs. </li></ul>
  4. 4. Instruments of Money Market <ul><li>Certificate of Deposit (C.D.) </li></ul><ul><li>Commercial Paper (C.P.) </li></ul><ul><li>Repurchase Agreement </li></ul><ul><li>Call Money </li></ul><ul><li>Treasury Bills </li></ul>
  5. 5. Certificate of Deposit(C.D.) <ul><li>CDs are short-term borrowings in the form of Usance Promissory Notes having a maturity of not less than 15 days up to a maximum of one year. </li></ul><ul><li>They are like bank term deposits accounts. Unlike traditional time deposits these are freely negotiable instruments and are often referred to as Negotiable Certificate of Deposits </li></ul>
  6. 6. Commercial Paper(C.P.) <ul><li>Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. </li></ul><ul><li>Who can issue Commercial Paper (CP) Highly rated corporate borrowers, primary dealers (PDs) and satellite dealers (SDs) and all-India financial institutions (FIs) </li></ul>
  7. 7. Repurchase Agreement <ul><li>It is a transaction in which two parties agree to sell and repurchase the same security. Under such an agreement the seller sells specified securities with an agreement to repurchase the same at a mutually decided future date and a price </li></ul><ul><li>The Repo/Reverse Repo transaction can only be done at Mumbai between parties approved by RBI and in securities as approved by RBI (Treasury Bills, Central/State Govt securities). </li></ul>
  8. 8. Call Money Market <ul><li>The call money market is an integral part of the Indian Money Market, where the day-to-day surplus funds (mostly of banks) are traded. The loans are of short-term duration varying from 1 to 14 days. </li></ul><ul><li>The money that is lent for one day in this market is known as &quot; Call Money &quot;, and if it exceeds one day (but less than 15 days) it is referred to as &quot; Notice Money &quot;. </li></ul>
  9. 9. Treasury Bills <ul><li>Treasury bills, commonly referred to as T-Bills are issued by Government of India against their short term borrowing requirements with maturities ranging between 14 to 364 days. </li></ul><ul><li>All these are issued at a discount-to-face value. For example a Treasury bill of Rs. 100.00 face value issued for Rs. 91.50 gets redeemed at the end of it's tenure at Rs. 100.00. </li></ul>
  10. 10. FOREX :- The Foreign Exchange Market
  11. 11. The Foreign Exchange Market <ul><li>The foreign exchange market is the market where the currency of one country is exchanged for the currency of another country. Most currency transactions are channelled through the world-wide interbank market. Interbank market is the wholesale market in which major banks trade with each other. </li></ul>
  12. 12. Participants of FOREX MKT <ul><ul><li>Speculators </li></ul></ul><ul><ul><li>Arbitrageurs </li></ul></ul><ul><ul><li>Traders </li></ul></ul><ul><ul><li>Hedgers </li></ul></ul>
  13. 13. Foreign Exchange Rates <ul><li>A foreign exchange rate is the price of one currency quoted in terms of another currency </li></ul><ul><li>Direct quote </li></ul><ul><li>Indirect quote </li></ul><ul><li>A cross rate is an exchange rate between the currencies of two countries that are not quoted against each other, but are quoted against one common currency. </li></ul>
  14. 14. Foreign Exchange Rates <ul><li>The spot exchange rate is the rate at which a currency can be bought or sold for immediate delivery which is within two business days after the day of the trade. </li></ul><ul><li>Bid-ask spread is the difference between the bid and ask rates of a currency. </li></ul><ul><li>The forward exchange rate is the rate that is currently paid for the delivery of a currency at some future date. </li></ul><ul><li>The forward rate may be at a premium or at a discount. </li></ul><ul><li>For a direct quote , the annualised forward discount or premium can be calculated as follows: </li></ul>
  15. 15. Some reasons to trade in FOREX <ul><li>24-hour forex trading </li></ul><ul><li>Superior liquidity </li></ul><ul><li>100:1 Leverage in forex trading </li></ul><ul><li>Lower transaction costs </li></ul><ul><li>Equal profit potential in both rising and falling markets </li></ul>
  16. 16. Some Cautions!!! <ul><li>The market could move against you. </li></ul><ul><li>You could lose your entire investment. Due to the leverage effect!! </li></ul>
  17. 17. <ul><li>Thank You !!! </li></ul>