This presentation talks about all the aspects of Foreign Exchange

2. Subject : International
Business
Submitted To : Dr. Aarti Joshi
Submitted By : Pallavi Priya
MBA, Semester – II

3. FOREIGN EXCHANGE
The term Foreign Exchange implies two things:
a)Foreign currency
b)Exchange rate
Foreign exchange is money denominated in the
currency of another nation or group of nations
or, we can say, the mechanism by which the
currency of one country gets converted into the
currency of another country.

4. Conti...
In other words, it refers to the global market
where currencies are traded virtually around
the clock.
 The term foreign exchange is usually
abbreviated as "forex" and occasionally as
"FX”
 The conversion of currency is done by the
banks who deal in foreign exchange

5. Example
For an instance, Nepalese migrant workers in
the United States often use Western Union to
convert dollars to nepalese rupees and then
wire the nepalese rupees to offices in Nepal
where relative can retrieve the cash.

6. FOREIGN EXCHANGE
It can be in the form of:
 Cash
 Funds available on credit and debit cards
 Traveler's checks
 Bank deposits
 Or other short-term claims
 Forex is the international market for the free trade
of currencies. Traders place orders to buy one
currency with another currency

7. Conti...
 The global foreign exchange market is the
largest financial market in the world, with
average daily volumes in the trillions of dollars
 The largest trading centres are London, New
York, Singapore and Tokyo
 Increasing Globalization has led to a massive
increase in the number of foreign exchange
transactions in recent decades

8. FOREIGN EXCHANGE
MARKET
It is the market wherein the foreign exchange
transactions take place.
In other words, the foreign exchange market
is the market in which participants are able to
buy, sell, exchange and speculate on
currencies.
Example: If an Indian importer imports goods
from USA and has to make payments in US
dollars.

9. Conti...
 Foreign Exchange market is made up of banks,
Commercial companies, Central
Banks, Investment management firms and
Retail forex brokers and investors
 The exchange is the price of a currency
 It is the number of units of one currency that buys
one unit of another currency, and this number can
change daily
 Such as, on March 15 2017, 1 Euro could
purchase 69.76 Indian Rupee

10. The Key Players in the
FOREIGN EXCHANGE MARKET
 The Bank for International Settlements(BIS) divides
the Foreign Exchange Market into:
 Reporting Dealers/ Money Centre Banks such as
Wells Fargo, JP Morgan, Citigroup and many others
 Commercial Banks and Other Financial
Institutions including Local & Regional banks
 Non banking financial institutions such as Western
Union

11. Four main uses of FX for
International Business
 Convert proceeds from imports, exports and
FDI
 When buying goods in a certain country's
currency
 When business have spare cash that they
want to invest for short terms in money
markets
 Currency speculation

12. 1 Indian Rupee Rates Table (as on
15th march 2017)
Indian Rupee 1.00 INR inv. 1.00 INR
US Dollar 0.015203 65.776134
Euro 0.014290 69.980350
British Pound 0.012497 80.021597
Australian Dollar 0.020087 49.784547
Canadian Dollar 0.020497 48.787756
Singapore Dollar 0.021496 46.520765
Swiss Franc 0.015317 65.285796
Malaysian Ringgit 0.067652 14.781575
Japanese Yen 1.741672 0.574161
Chinese Yuan
Renminbi
0.105125 9.512485
Nepalese Rupee 1.603560 0.623612

13. Top 10 Currency Traders as of
May 2016
Rank Name Market share
1 Citi 12.9 %
2 JP Morgan 8.8%
3 UBS 8.8%
4
Deutsche
Bank
7.9%
5
Bank of
America Merrill
Lynch
6.4%
6 Barclays 5.7%
7
Goldman
Sachs
4.7%
8 HSBC 4.6%

14. Major Foreign-Exchange
Markets
 Spot Market
 Forward Market
 Options
 Futures