The foreign exchange market is the largest financial market in the world, with over $4 trillion traded daily. It allows currencies to be exchanged between countries, facilitating international trade and investment. The market operates globally across various time zones and locations. It consists of banks, brokers, institutions, and other entities engaging in the buying and selling of national currencies. The value of a currency is determined by supply and demand forces in this decentralized market.
A detail on forex market is being provided refering to global forex hours and the need of forex market. DAILY TURNOVER OF THE GLOBAL FOREIGN EXCHANGE. Indian forex market is also explaied with reference to usd inr movement. A brief technical analysis is also provided explaning the different chart types
A detail on forex market is being provided refering to global forex hours and the need of forex market. DAILY TURNOVER OF THE GLOBAL FOREIGN EXCHANGE. Indian forex market is also explaied with reference to usd inr movement. A brief technical analysis is also provided explaning the different chart types
This presentation has information about International pricing methods & factors affecting International pricing & Incoterms used in International trade
The slides contain discussion on the global capital market as well as international lending. It also identifies the different bond markets at well as current data on international lending.
The foreign exchange market or forex market as it is often called is the market in which currencies are traded.
Currency Trading is the world’s largest market consisting of almost trillion in daily volumes
The market continues to rapidly grow. Not only is the forex market the largest market in the world, but it is also the most liquid, differentiating it from the other markets.
There is no central marketplace for the exchange of currency, but instead the trading is conducted over-the-counter.
This decentralization of the market allows traders to choose from a number of different dealers to make trades with and allows for comparison of prices. Typically, the larger a dealer is the better access they have to pricing at the largest banks in the world, and are able to pass that on to their clients.
The spot currency market is open twenty-four hours a day, five days a week, with currencies being traded around the world in all of the major financial centers.
All trades that take place in the foreign exchange market involve the buying of one currency and the selling of another currency simultaneously. This is because the value of one currency is determined by its comparison to another currency.
The first currency of a currency pair is called the “base currency,” while the second currency is called the counter currency. The currency pair shows how much of the counter currency is needed to purchase one unit of the base currency.
Currency pairs can be thought of as a single unit that can be bought or sold. When purchasing a currency pair, the base currency is being bought, while the counter currency is being sold.
Forex Capital Markets (FXCM) is an online currency trading firm that offers a free demo account to traders who are new and interested in the foreign exchange market.
It allows you to experience every step of currency trading including choosing currency pairs, deciding how much risk to take, tracking the time and dates of placed trades, deciding how long to stay in the trade, and when to exit the trade. It also allows the placing of stop and limit orders on trades.
Information about trading and specifically about how to use the online trading platform can be found on the FXCM webpage. In addition, FXCM offers FREE interactive online seminars that are extremely useful to both new and experienced currency traders.
Characteristics of foreign exchange
Its huge trading volume representing the largest asset class in the world leading to high liquidity;
Its geographical dispersion;
Its continuous operation: 24 hours a day except weekends, i.e., trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
The variety of factors that affect exchange rates;
The low margins of relative profit compared with other markets of fixed income;
The use of leverage to enhance profit and loss margins and with respect to account size.
8 key factors that affect foreign exchange ratesannadesoza123
The exchange rate is defined as "the rate at which one country's currency may be converted into another." It may fluctuate daily with the changing market forces of supply and demand of currencies from one country to another.
This presentation has information about International pricing methods & factors affecting International pricing & Incoterms used in International trade
The slides contain discussion on the global capital market as well as international lending. It also identifies the different bond markets at well as current data on international lending.
The foreign exchange market or forex market as it is often called is the market in which currencies are traded.
Currency Trading is the world’s largest market consisting of almost trillion in daily volumes
The market continues to rapidly grow. Not only is the forex market the largest market in the world, but it is also the most liquid, differentiating it from the other markets.
There is no central marketplace for the exchange of currency, but instead the trading is conducted over-the-counter.
This decentralization of the market allows traders to choose from a number of different dealers to make trades with and allows for comparison of prices. Typically, the larger a dealer is the better access they have to pricing at the largest banks in the world, and are able to pass that on to their clients.
The spot currency market is open twenty-four hours a day, five days a week, with currencies being traded around the world in all of the major financial centers.
All trades that take place in the foreign exchange market involve the buying of one currency and the selling of another currency simultaneously. This is because the value of one currency is determined by its comparison to another currency.
The first currency of a currency pair is called the “base currency,” while the second currency is called the counter currency. The currency pair shows how much of the counter currency is needed to purchase one unit of the base currency.
Currency pairs can be thought of as a single unit that can be bought or sold. When purchasing a currency pair, the base currency is being bought, while the counter currency is being sold.
Forex Capital Markets (FXCM) is an online currency trading firm that offers a free demo account to traders who are new and interested in the foreign exchange market.
It allows you to experience every step of currency trading including choosing currency pairs, deciding how much risk to take, tracking the time and dates of placed trades, deciding how long to stay in the trade, and when to exit the trade. It also allows the placing of stop and limit orders on trades.
Information about trading and specifically about how to use the online trading platform can be found on the FXCM webpage. In addition, FXCM offers FREE interactive online seminars that are extremely useful to both new and experienced currency traders.
Characteristics of foreign exchange
Its huge trading volume representing the largest asset class in the world leading to high liquidity;
Its geographical dispersion;
Its continuous operation: 24 hours a day except weekends, i.e., trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
The variety of factors that affect exchange rates;
The low margins of relative profit compared with other markets of fixed income;
The use of leverage to enhance profit and loss margins and with respect to account size.
8 key factors that affect foreign exchange ratesannadesoza123
The exchange rate is defined as "the rate at which one country's currency may be converted into another." It may fluctuate daily with the changing market forces of supply and demand of currencies from one country to another.
It is very helpful for the students to describe the background and corporate use of the following international financial markets:
Foreign exchange market,
Eurocurrency market,
Euro credit market,
Eurobond market, and
International stock markets.
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when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
how can I sell my pi coins for cash in a pi APPDOT TECH
You can't sell your pi coins in the pi network app. because it is not listed yet on any exchange.
The only way you can sell is by trading your pi coins with an investor (a person looking forward to hold massive amounts of pi coins before mainnet launch) .
You don't need to meet the investor directly all the trades are done with a pi vendor/merchant (a person that buys the pi coins from miners and resell it to investors)
I Will leave The telegram contact of my personal pi vendor, if you are finding a legitimate one.
@Pi_vendor_247
#pi network
#pi coins
#money
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
2. Meaning Of Foreign Exchange
According to Hartly Withers, “ Foreign exchange is
the art and science of international monetary
exchange”
The forex market is the world’s largest financial
market. Over $4 trillion dollars worth of currency
are traded each day. The amount of money traded in
a week is bigger than the entire annual GDP of the
United States.
The main currency used for forex trading is the US
dollar.
3. Meaning Of Foreign Exchange
The term Foreign exchange implies two things:
a)foreign currency and b) exchange rate
Foreign exchange generally refers to foreign
currency, eg for india it is dollar, euro, yen, etc… &
The other part of foreign exchange is exchange rate
which is the price of one currency in terms of the
other currency.
Forex is the international market for the free trade of
currencies. Traders place orders to buy one currency
with another currency.
4. Definition and Organization of the
Foreign Exchange Markets
Foreign exchange markets are markets on which
individuals, firms and banks buy and sell foreign
currencies:
– foreign exchange trading occurs with the help of the
telecommunication net between buyers and sellers of
foreign exchange that are located all over the world
– a single international foreign exchange market for
every single currency
– foreign exchange trading takes place at least in some
of the world financial centers in every moment
5. Forex Trading in India – Legal or Illegal
In India, Foreign Exchange or Forex trading is not
allowed. If someone is found trading Forex
instruments on the forex market by the Reserve
Bank of India’s representatives, he/she is
immediately charged of violation of law. Hence it is
legally a crime to involve in Forex trading and the
charges of the crime are imprisonment in jail in
this country. The offence is considered immense,
the prediction of intensity can be deduced from
this fact that it has been labeled to be non-bail
able.
6. The Currency Market
Where money denominated in one currency is
bought and sold with money denominated in
another currency.
International Trade and Capital Transactions:
• facilitated with the ability to transfer
purchasing power between countries.
7. Location
1. OTC-type: no specific location
2. Most trades by phone, telex, or SWIFT
SWIFT: Society for Worldwide Interbank
Financial Telecommunications
8. Foreign Exchange Market
Foreign exchange market is that market in which
national currencies are traded for one another..
The major participants in this market are
commercial banks, forex brokers, and authorized
dealers and the monetary authorities.
Besides, transfer of funds form one country to
another , speculation is an important dimension
of foreign exchange market.
Its where money in one currency is exchanged for
another
9. Participants in the Foreign Exchange
Market
Participants at 2 Levels
1. Wholesale Level (95%) - major banks
2. Retail Level (business customers)
Two Types of Currency Markets
1. Spot Market:
- Immediate transaction
- Recorded by 2nd business day
2. Forward Market:
- Transactions take place at a specified future date
10. Participants by Market
Spot Market
a. commercial banks
b. Brokers
c. customers of commercial and central banks
Forward Market
a. arbitrageurs
b. traders
c. hedgers
d. speculators
11. CLEARING SYSTEMS
A. Clearing House Interbank Payments System
(CHIPS)
- used in U.S. for electronic fund transfers.
B.Fed Wire
- operated by the Fed
- used for domestic transfers
12. Foreign Exchange Market Functions
Clearing of Currencies and Provision of Credit
Clearing of currencies:
– Service of exchanging one currency for another
Provision of Credit:
– Trader that bought a certain good from the
manufacturer, needs time to sell this good to the
final customer and to pay the manufacturer with
the money he received from the customer
13. Foreign Exchange Market and Insurance
Against Foreign Exchange Risk
Activities with which the foreign exchange
market participants avoid exchange rate risk
or activities with which they are closing
their open foreign exchange position
closed foreign exchange position:
• Size of the assets in a certain currency is equal
to the size of the liabilities in the same currency
• Full insurance against exchange rate risk with
respect to this currency
14. Foreign Exchange Market and Insurance
Against Foreign Exchange Risk
Open foreign exchange position:
• long: net assets in a certain currency
• short: net liabilities in a certain currency
In the spot or forward foreign exchange market
Standardized forward contracts and options
15. Foreign Exchange Markets and Conscious
Foreign Exchange Risk Acceptance
• Activities in which economic agents
consciously open their foreign exchange
positions – long or short – hoping to get
profits in all foreign exchange market
segments
16. Foreign Exchange Market Participants
Economic Agents and Types of Activities on
Foreign Exchange Markets
Client buys $
with €
Local bank
Main banks’
interbank market
Local bank
Client buys €
with $
Purchases and sales
of big multinational
companies
Brokers
17. Economic Agents and Types of Activities
on Foreign Exchange Markets
Bank clients (individuals, firms, non-banking
financial institutions):
– All those groups of legal and physical persons that
need foreign currency in doing their commercial
or investment business
commercial banks:
The most important group of foreign exchange
market participants
They buy and sell foreign currencies for their
clients and trade for themselves
18. Economic Agents and Types of Activities
on Foreign Exchange Markets
Brokers:
– Agents that connects dealers interested in buying
and selling foreign exchange, but does not
become an active client in the transaction
– They provide their client, the bank, with the
information about the exchange rates at which
banks are willing to buy or sell a particular
currency
19. Economic Agents and Types of Activities
on Foreign Exchange Markets
central banks:
Foreign exchange market interventions are meant
to influence the exchange rate of the domestic
currency in a way that is beneficial for the
domestic economy and, consequently, for the
country
It does not necessarily have a profit, it can also
have a loss
20. Economic Agents and Motivation for the
Foreign Exchange Market Participation
Arbitragers:
• They want to earn a profit without taking
any kind of risk (usually commercial banks):
• Try to profit from simultaneous exchange rate
differences in different markets
• Making use of the interest rate differences that
exist in national financial markets of two
countries along with transactions on spot and
forward foreign exchange market at the same
time (covered interest parity)
21. Economic Agents and Motivation for the
Foreign Exchange Market Participation
Hedgers and Speculators:
Hedgers do not want to take risk while
participating in the market, they want to insure
themselves against the exchange rate changes
Speculators think they know what the future
exchange rate of a particular currency will be, and
they are willing to accept exchange rate risk with
the goal of making profit
Every foreign exchange market participant can
behave either as a hedger or as a speculator in the
context of a particular transaction
22. Size and Structure of Foreign
Exchange Market Transactions
The biggest share of all financial markets in the world
Most traded currencies by value
Currency distribution of global foreign exchange market turnover
Rank Currency
ISO 4217 code
(Symbol)
% daily share
(April 2013)
1 United States dollar USD ($) 87.0%
2 Euro EUR (€) 33.4%
3 Japanese yen JPY (¥) 23.0%
4 Pound sterling GBP (£) 11.8%
5 Australian dollar AUD ($) 8.6%
23. 6 Swiss franc CHF (Fr) 5.2%
7 Canadian dollar CAD ($) 4.6%
8 Mexican peso MXN ($) 2.5%
9 Chinese yuan CNY (¥) 2.2%
10 New Zealand dollar NZD ($) 2.0%
11 Swedish krona SEK (kr) 1.8%
12 Russian ruble RUB (₽) 1.6%
13 Hong Kong dollar HKD ($) 1.4%
14 Norwegian krone NOK (kr) 1.4%
15 Singapore dollar SGD ($) 1.4%
24. 16 Turkish lira TRY (₺) 1.3%
17 South Korean won KRW (₩) 1.2%
18 South African rand ZAR (R) 1.1%
19 Brazilian real BRL (R$) 1.1%
20 Indian rupee INR (₹) 1.0%
21 Danish krone DKK (kr.) 1.0%
22 Israeli new shekel ILS (₪) 1.0%
Other 8.3%
Total 200%
25. Types of Foreign Exchange Market Transactions
Spot Foreign Exchange Transactions
Almost immediate delivery of foreign
exchange.
Outright Forward Transactions
Buyer and seller establish the exchange rate at the time of the
agreement, payment and delivery are not required until maturity
Forward exchange rates:
1, 3, 6, 9 months, one year
27. Hedging
The act of reducing exchange rate risk
Forward Rate Quotations
Two Methods:
a) Outright Rate: quoted to commercial
customers.
b) Swap Rate: quoted in the interbank
market as a discount or premium.
28. Forward Contract
An agreement between a bank and a
customer to deliver a specified amount of
currency against another currency at a
specified future date and at a fixed exchange
rate.
29. Futures
Basic characteristics of futures:
– The amount of the currency that is being traded
– Type of currency quotation
– Contract expiration
– Last day of trading with the contract
– Settlement day
– Margin requirements
Information about futures trading
Futures usage:
– Arbitrage between outright forward contract and
futures
– Rarely used as an insurance instrument (rigidity!)
30. Futures positions
Futures are similar to forwards
First, futures positions require a margin deposit to be
posted and maintained daily.
If a loss is taken on the contract, the amount is debited
from the margin account after the close of trading.
In other words, these futures are cash settled and no
underlying instruments or principals are exchanged.
Secondly, all contract specifications such as expiration
time, face amount, and margins are determined by the
exchange instead of by the individual trading parties.
31. similarities and differences between outright forward contract
and futures:
– both need to be executed unconditionally
– they are usually established for at most one year
Characteristic Futures Outright Forward Contract
Size of the contracts standardized for a given currency depends on the individualneeds of the
client
Location and trade
activity
at the stock exchange or at a given
location; actively traded in an
organized market
with the provision of agents, connected
among each other with the help of
telecommunications; not traded in an
organized market
Duration of the
contract
standardized, but at most a year depends on the individualneeds of the
client , but not more than a year
Contract has to be
executed
yes yes
Insurance and
Security of doing
Business with the
Instrument
insurance explicitly required (margin
requirements); high security of doing
business with the instrument
insurance not required explicitly
(implicit insurance are affiliations of
two partners up tillnow); lower
security than futures
Trade regulation regulated with the stock exchange
rules
regulation not explicitly determined
32. Options
Basic characteristics of options:
– Financial instrument that gives the buyer the right,
but not the obligation, to buy or sell a standardized
amount of a foreign currency, that is traded, at a fixed
price at a particular time, or until a particular time in
the future
– Call option and put option
– American and European options
– Three different prices:
• Exercise/strike price
• Cost, price or value of the option
• Underlying or actual spot exchange rate
33. Options
• Options are a way of buying or selling a currency
at a certain point in the future.
• An option is a contract which specifies the price
at which an amount of currency can be bought at
a date in the future called the expiration date.
• Unlike forwards and futures, the owner of an
option does not have to go through with the
transaction if he or she does not wish to do so.
34. Types of options
The buyer of a call has the right but not the obligation to buy the
underlying asset at the strike price on or before a specified date in
the future.
However, the seller has a potential obligation to sell the underlying
asset at the strike price on or before a specified date in the future if
the holder of the option exercises his or her right.
The buyer of a put has the right but not the obligation to sell the
underlying asset at the strike price on or before a specified date in
the future.
On the other hand, the seller of a put has a potential obligation to
buy the underlying asset at the strike price on or before a specified
date in the future if the holder of the option exercises his/her right.
35. Options
Types of options trading:
– In organized markets:
• standardized contracts with given strike prices,
standardized durations (1, 3, 6, 9, 12 months) and
expirations
• only certain currencies, contract amounts are
standardized
– over-the-counter trading:
• expiration date, strike price and contract amount depend
on the individual needs of the client
• counterparty risk!
• retail and interbank market
36. Options
Usage of options:
– when the economic agent expects that the
exchange rate trend of a particular currency could
change drastically
– when the economic agent does not know for sure
that a certain foreign exchange flow will occur in
the future
– Advantages:
• Fixed option costs
• Options do not need to be executed
37. Advantages Of Forex Market
It’s already the world’s largest market and it’s still
growing quickly
It makes extensive use of information technology –
making it available to everyone
Traders can profit from both strong and weak
economies
Trader can place very short-term orders – which are
prohibited in some other markets
The market is not regulated
Brokerage commissions are very low or non-existent
The market is open 24 hours a day during weekdays
38. Terms Related to Foreign Exchange
Foreign exchange reserves- holdings of other countries' currencies
Foreign exchange controls- controls imposed by a government on
the purchase/sale of foreign currencies
Retail foreign exchange platform- speculative trading of foreign
exchange by individuals using electronic trading platforms
Foreign exchange risk- arises from the change in price of one
currency against another
International trade- the exchange of goods and services across
national boundaries
Foreign exchange company- a broker that offers currency exchange
and international payments
Bureau de change- a business whose customers exchange one
currency for another
Currency pair- the quotation of the relative value of a currency unit
against the unit of another currency in the foreign exchange market
Digital currency exchanger- market makers which exchange fiat
currency for electronic money
39. Exchange Rate
According to haines, “Exchange rate is the price
of the currency of a country can be exchanged for
the number of units of currency of another
country.”
Exchange rate is that rate at which one unit of
currency of a country can be exchanged for the
number of units of currency of another country.
It’s the price for which one currency is exchanged
for another
40. Factors Influencing Exchange Rates
As with any market, the forex market is driven by supply and demand:
If buyers exceed sellers, prices go up
If sellers outnumber buyers, prices go down
The following factors can influence exchange rates:
National economic performance
Central bank policy
Interest rates
Trade balances – imports and exports
Political factors – such as elections and policy changes
Market sentiment – expectations and rumours
Unforeseen events – terrorism and natural disasters
Despite all these factors, the global forex market is more stable than
stock markets; exchange rates change slowly and by small amounts.
42. Fixed and Floating Exchange Rates
Fixed exchange rate is the official rate set by
the monetary authorities of the Governance
for one or more currencies.
Under floating exchange rate, the value of the
currency is decided by supply and demand
factors
43. Direct and Indirect Exchange Rates
Direct method - Under this, a given number of
units of local currency per unit of foreign
currency is quoted. They are designated as
direct/certain rates because the rupee cost of
single foreign currency unit can be obtained
directly. Direct quotation is also called home
currency quotation.
Indirect method – Under this, a given number of
units of foreign currency per unit of local
currency is quoted. Indirect quotation is also
called foreign currency quotation
44. Buying and Selling
Exchange rates are quoted as two way quotes –
for purchase and
for sale
Transactions by the Bank
45. Spot and Forward
The delivery under a foreign exchange transaction
can be settled in one of the following ways
Ready or cash – To be settled on the same day
Tom – To be settled on the day next to the date
of transaction
Spot – To be settled on the second working day
from the date of contract
Forward – To be settled at a date farther than the
spot date
46. Theories of Exchange Rate
Determination
Meaning:
Theories which determine the prices of forex
rate considering inflation, interest rate, and
elasticity of price etc..
Methods:
a)Long run theory
b)Short run theory
47. Long Run Theory Of Exchange Rate
Determination:
This are the theories which predominately take into
account the fundamental changes of economy.
Here fundamental changes refers to the change which are
going to change the economic performance of the
economy Purchasing power for all times to come.
Types of theory:
Purchasing power parity.
1) Absolute purchasing power parity.
2) Relative purchasing power parity.
Interest Rate parity.
1) Covered Interest Rate parity.
2) Uncovered Interest Rate parity.
48. Short Run Theory Of Exchange Rate
Determination
This theories are based more on current
information or immediate performance of
economic variables.
This theories try to take into account the short
run factor which may be eliminated in the
long run.
49. Purchasing power parity Theory
Founder –Swedish economist Gustav Cassel in 1918.
Meaning : According to this theory ,the price levels
and the changes in these price levels in different
countries determine the exchanges rates of these
countries currencies.
The basic principle of this theory is that the
exchange rates between various currencies reflect
the purchasing power of these currencies .This
theory is based law of one price.
50. Absolute Form Of PPP Theory
If the law of one price were to hold good for
each and every commodity then the theory is
termed as Absolute form of PPP Theory.
This theory describes the link between the
spot exchange rate and price levels at a
particular point of time
51. Relative Form Of PPP
This theory describes the link between the
changes in spot exchange rate and in the price
levels over a period of time.
According to this theory ,changes in spot rates
over a period of time reflect the changes in the
price level over the same period in the concerned
economies.
This theory relaxes three assumptions of PPP i.e.
Absences of transportation cost ,transaction costs
and tariffs.
52. Interest Rate Parity Theory
Definition :
The process that ensures that the annualized forward
premium or discount equals the interest rate differential
on equivalent securities in two currencies.
International Fisher effect:
Expected Rate of change = Interest rate of the
exchange rate differential
Interest Rate = Real Interest Expected Differential Rate
+ inflation rate
53. Modern theory: Demand & Supply
Theory
The most satisfactory explanation of the
determination of the rate of exchange is that a
free exchange rate tends to be such as to
equate the demand and supply of foreign
exchange..
The intersection of supply curve and demand
curve gives the equilibrium price
Modern theory also called balance of
payments theory of foreign exchange
54. Foreign Exchange Risk
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.
55. Risk Management
Controlling losses
You could control your losses, by mental stop or hard stop. Mental stop
means that you already set you limit of your loss. A hard stop is your
initiative to stop when you think you must to stop it.
Using correct lot size
As a beginning just use smaller lots you could stay flexible and logic than
emotions while you trade.
Tracking overall exposure
sample: you go to short on EUR/USD and long on USD/CHF, you exposed
two times for USD in the same direction. If USD goes down , you have a
double dose of pain. So, keep your overall exposure limited, it keeps you
for the long haul for trading
The bottom line
Trading is about opportunities, you must take action while the
opportunities arise.