Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Forex Mkt

490 views

Published on

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

Forex Mkt

  1. 1. FOREIGN EXCHANGE MARKET
  2. 2. <ul><li>THE FOREIGN EXCHANGE MARKET </li></ul><ul><li>This is over the counter market ( OTC ) i.e. there is no physical </li></ul><ul><li>market place to make the deals. </li></ul><ul><li>Instead it is a net work of banks , brokers and dealers spread </li></ul><ul><li>across the various financial centers of the world . </li></ul><ul><li>These players trade in different currency through telephones , faxes </li></ul><ul><li>, computers and other electronic networks like the SWIFT system </li></ul><ul><li>( Society for Worldwide Inter bank Financial Telecommunication) . </li></ul><ul><li>These traders generally operate through a trading room . </li></ul><ul><li>The deals are finalized orally with written communication </li></ul><ul><li>following later . </li></ul>
  3. 3. <ul><li>THE PLAYERS </li></ul><ul><li>The main players in the foreign exchange market are : </li></ul><ul><li>large commercial banks, </li></ul><ul><li>forex brokers , </li></ul><ul><li>large corporations and </li></ul><ul><li>the central banks . </li></ul><ul><li>The central banks enter the market to smoothen out fluctuations in the exchange rates . </li></ul>
  4. 4. <ul><li>FOREIGN EXCHANGE </li></ul><ul><li>As defined in Section 2 of FEMA , 1999 foreign exchange includes : </li></ul><ul><li>all deposits ,credits , balance payable in any foreign currency , </li></ul><ul><li>any drafts , travelers` cheques , letter of credit and bills of exchange , </li></ul><ul><li>any instrument giving anyone the option of making it payable either partly or fully in a foreign currency . </li></ul><ul><li>Here the term currency includes coins , bank notes , postal notes , </li></ul><ul><li>postal orders and money orders . </li></ul>
  5. 5. <ul><li>Market Makers : </li></ul><ul><li>The large commercial banks which stand ready to buy and sell various currencies at specific prices at all points of time . </li></ul><ul><li>Retail Market : </li></ul><ul><li>The market in which the commercial banks deal with the customers both individuals and corporate . </li></ul><ul><li>Inter bank Market / Wholesale Market: </li></ul><ul><li>The mkt. in which banks deal with each other </li></ul><ul><li>A 24 Hour Market : </li></ul><ul><li>The world wide forex mkt. is a 24 – hour mkt. i.e. trading is going on at least one of the forex market through out the day. </li></ul>
  6. 6. <ul><li>EXCHANGE RATE QUOTATIONS </li></ul><ul><li>An exchange rate quotation is the price of a currency stated </li></ul><ul><li>in terms of another i.e. the price of one currency quoted </li></ul><ul><li>in terms of 1unit of the other currency . </li></ul><ul><li>For e.g. Rs. / $ : 46.40 / 46.65 </li></ul>
  7. 7. <ul><li>TYPES OF TRANSACTIONS </li></ul><ul><li>Foreign exchange transactions can be classified on the basis of the </li></ul><ul><li>time between entering into a transaction and its settlement . </li></ul><ul><li>Outright / Cash / Ready Transaction : </li></ul><ul><li>When the exchange of currency takes place on the date of the deal . </li></ul><ul><li>TOM ( tomorrow ) Transaction : </li></ul><ul><li>When the exchange of currency takes place on the next working day . </li></ul><ul><li>SPOT Transaction : </li></ul><ul><li>When the transaction will be settled after 2 business days from the date of the contract . </li></ul>

×