The document summarizes key aspects of foreign exchange markets. It discusses that the forex market is a decentralized global market for trading currencies that operates 24 hours a day. The largest forex markets are located in London, New York, Tokyo, Zurich, and Frankfurt. It also notes that India's foreign exchange reserves reached $360 billion in March 2016. The reserves help with monetary policy, exchange rates, providing liquidity and buffer against external factors, and earning subsidiary revenue. The document outlines the different types of forex markets including merchant, inter-bank, and international markets and lists some common participants. It also describes exchange rate mechanisms and derivatives used to manage foreign exchange risk.

2. FOREIGN EXCHANGE MARKET
 Forex currency market is a global decentralized
market for the trading of currencies
 Its an OTC (over the counter) market as there is no
physical place is functioning throughout 24 hours .
 largest foreign exchange market is in London,
followed by the New York, Tokyo, Zurich and
Frankfurt

3. source-easyfxupdates.blogspot.com

4. FOREIGN EXCHANGE RESERVES OF
INDIA
 India’s total foreign exchange reserves touched $360 billion
by end March 2016, up by $18 billion

5. NEED FOR FOREIGN EXCHANGE
Monetary policy instrument
Exchange rate instrument
Liquidity buffer
Reduce vulnerability to external factors
Stability and confidence in financial
markets
Subsidiary revenue

6. TYPES OF FOREX
MARKETS
Merchant Market
-Spot & Forward transaction
Inter-Bank Market
International Market

7. PARTICIPANTS
PARTICIPANTS
CUSTOMERS
COMMERCIAL
BANK
CENTRAL BANK
EXCHANGE
BROKERS
OVERSEAS
FOREX MARKET
SPECULATORS

8. EXCHANGE RATE MECHANISM
Exchange Rates are quoted in two methods:
 Direct method
US$ 1 = ₹ 67.03
 Indirect method
₹100 = US$ 1.49

9. DERIVATIVES
 Derivatives are used to reduce exposure to changes in
foreign exchange rates, interest rates, or stock indexes
.
 Parties wishing to manage their risk are called
hedgers.
 Derivative products –
- Forward Contract
- FX Options- Call & Put
- Swaps
- Futures

11. KARRON MANWANI