PRESENTATION of my international business subject.. about complete knowledge of foreign exchange market..

2.  Marium
 Nimra
 Zoya
 Hina rahim
 Shuja mehak
 Rabia Qadir
 Humna
 Nida
 Sadia
 Rukhsana
 Ayesha iftikhar

3. FOREIGN EXCHANGE MARKETTOPIC:

4. INTERNATIONAL BUSINESS.
FOREIGN EXCHANGE MARKET
•International business may be defined simply as
business transactions that take place across national
borders
•'Foreign Exchange Market' The market in
which participants are able to buy, sell,
exchange and speculate on currencies.

5. •Also called “FOREX” market.
•It is place where foreign moneys were bought and sold
•It involves buying of one currency and selling of another
Currency simultaneously.
•Has no geographical boundaries

6. Participants of Foreign exchange markets are:

7. •Location: OTC Market – banks and brokers at a financial centre
•Wholesale and Retail segments
•Size : Daily turnover of over $3.98 trillion
• 24 hours market
• Efficiency
• Currencies traded.
Features of Foreign Exchange Market

8. When trade takes place….
The persons of these countries have to convert
their currencies
To other countries currencies to make payments.
WHY this Foreign Exchange Market needed ???

9. Foreign exchange market performs the following three functions:
1. Transfer Function:
It transfers purchasing power between the countries involved in the transaction. This function is
performed through credit instruments like bills of foreign exchange, bank drafts and telephonic transfers.
2. Credit Function:
It provides credit for foreign trade. Bills of exchange, with maturity period of three months, are generally
used for international payments. Credit is required for this period in order to enable the importer to take
possession of goods, sell them and obtain money to pay off the bill.
3. Hedging Function:
When exporters and importers enter into an agreement to sell and buy goods on some future date at the
current prices and exchange rate, it is called hedging. The purpose of hedging is to avoid losses that might
becaused due to exchange rate variations in the future.
Functions of Foreign Exchange Market

10. Telephonic Transfer
Methods of Affecting International Payment are:
Cheques and Bank Draft

11. Foreign Bill of Exchange

13. Main Types of Foreign Exchange Rates:
1. Fixed Exchange Rate System ( Pegged Exchange Rate System).
2. Flexible Exchange Rate System (Floating Exchange Rate System).
3. Managed Floating Rate System.
Other types:
1, Spot Exchange Rate System
2. Forward Exchange Rate System

14. 1. Fixed Exchange Rate System:
Fixed exchange rate system refers to a system in which
exchange rate for a currency is fixed by the government.
2. Flexible Exchange Rate System:
In this, the currency is allowed to fluctuate freely according to
changes in demand and supply of foreign exchange.
Types of F.E.M

15. 3. Managed Floating Rate System.
In this system, central bank interferes in the foreign exchange
market to restrict the fluctuations in the exchange rate within
certain limits. The aim is to keep exchange rate close to desired
target values. :
4.Spot Market:
Spot market refers to the market in which the receipts and
payments are made immediately.
5.Forward Market:
the market in which sale and purchase of foreign currency is
settled on a specified future date at a rate agreed upon today.

16.  Traders
 Arbitrageurs
 Hedgers
 Speculators
 Banks
 governments

17. As there is no central bank, trading can take place any where in the world
and operates on a 24 hour basis apart from weekends.
An investor needs only small amounts of capital compared with other
investment .forex trading is outstanding in this regard.
It is an unregulated market, meaning that there is no trade commission
overseeing transactions and there are no restrictions on trade.
Advantages of foreign exchange market

18. Advantages of foreign exchange market

19. 'PURCHASING POWER PARITY - PPP'
PPP is the exchange rate adjusts so that an identical good in
two different countries has the same price when expressed in
the same currency. It is also called The LAW of ONE price.
Where:
"S" represents exchange rate of currency 1 to currency 2
"P1" represents the cost of good "x" in currency 1
"P2" represents the cost of good "x" in currency 2
The relative version of PPP is calculated as:

20. $1 = RS 50
For Example:

21. Impact by “PPP” on economy

23. Nature of foreign exchange market.

24. Nature of foreign exchange market
The over-the-counter (OTC) market, where there is no central exchange and clearing
house where orders are matched. With different levels of access, currencies are traded
in different market makers:
The Inter-bank Market - Large commercial banks trade with each other through the
Electronic Brokerage System (EBS). Banks will make their quotes available in this
market only to those banks with which they trade. This market is not directly accessible
to retail traders.
The Online Market Maker - Retail traders can access the FX market through online
market makers that trade primarily out of the US and the UK. These market makers
typically have a relationship with several banks on EBS; the larger the trading volume
of the market maker, the more relationships it likely has.
•.

25. •Affected by demand and supply.
•Affected by rate of interest.
• Affected by inflation rate.
•Affected by economic stability of country.
•Affected by fiscal policy of the government
•Affected by Trade and capital flow
Factors Effecting “The Nature of foreign exchange market”

26. Currency Appreciation and Depreciation
Currency depreciation is the loss of value of
a country's currency with respect to one or
more foreign reference currencies, OR
decreasing in the value of a currency, is
currency depreciation..
The appreciation of a country's currency
refers to an increase in the value of that
country's currency. For example:
When a country's exports are high, the buyers of these
exports need its currency to pay for those exports.

27. Top Ten Currencies in the World
POSITION 1: U.S. DOLLAR # 2: EURO
# 3: JAPANESE YEN #4: STERLING Pound
Now, I am going to present the top ten currencies in the
world , the ranking is based and sorted with respect to
their popularity, growth, trade and business usage.

28. POST # 5: SWISS FRANC POST # 6: Australian doller.
POST # 7: CANADIAN DOLLAR POST # 8: SWEDISH CROWN

29. # 9: HONGKONG DOLLAR # 10: CORONA NORWAY

30. ► PLAN YOUR TRADE AND TRADE YOUR PLAN.
► THE TREND IS YOUR FRIEND.
►FOCUS ON CAPITAL PRESERVATION.
►KNOW WHEN TO CUT LOSS.
►TAKE PROFIT WHEN THE TRADE IS GOOD.
►BE EMOTIONLESS.
►TRADE is not BASED ON A TIP FROM A FRIEND OR BROKER..
CURRENCY TRADING RULES

31. •Exposure to exchange rate movement.
•Any sale or purchase of foreign currency entails foreign exchange risk.
•Foreign exchange transaction affects the net asset or net liability position of the
buyer/seller.
•Carrying net assets or net liability position in any currency gives rise to exchange risk.
Foreign Exchange Risk

32. ►Trading Out of Boredom or Anger
►Having Unrealistic Expectations.
►Taking Highly Correlated Trades.
►Failing to Use a Stop
►Taking Unnecessary Risks.
►Being Too Patient With Losers and Not Patient Enough With Winners.
Mistakes by Traders in Forex market.

33. Now you can ask any question,
Regarding our Presentation topic
FROM OUR ANY GROUP MEMBER.