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Introduction to Foreign Exchange

Foreign Exchange means Foreign Currency. If we consider Foreign Exchange as a subject then it
means all kinds of transactions related to foreign Currency, as well as currency instruments such
as draft, MT, TT, TC, and Payment Order & Foreign Trade. In other words Foreign Exchange
deals with Foreign Financial Transactions. Foreign Exchange refers to the process or mechanism
by which the currency of one country is converted into the currency of another currency and,
thereby, involves the international transfer of money. It is the means of method by which rights
to wealth in a country’s currency are converted into rights to wealth in another currency. In
banks where we talk Foreign Exchange, we refer to the general mechanism by which a bank
converts currency of one country into that of another’s.

Dr. Paul Einzig defines Foreign Exchange as the system or process of converting one national
currency into another and of transferring the ownership of money from one country to another.

In the words of Mr. H. E. Evitt, Foreign Exchange is that section of Economic Science which
deals with the means and method by which rights to wealth on one country’s currency are
converted into rights to wealth in terms of another country’s currency. In terms of Foreign
Exchange Regulations Act, 1947 as adapted in Bangladesh, Foreign Exchange means Foreign
Currency and include all deposits cr4edits and balances payable in Foreign currency as well as
all Foreign currency instruments, such as, Drafts, Travelers Cheques, Bill of Exchange, Hundi,
and Promissory Notes payable in any foreign country.

Types of Foreign Exchange


There are three kinds of Foreign Exchange Transactions

1. Import
2. Export and
3. Remittance (Inward and Outward)

What is the need for foreign exchange?


Foreign exchange market allows businesses to convert from one currency to another currency.
Here is an example explained by our forex assignment help experts:
FX allows a US business to import goods from the UK and pay Pound Sterling in spite of the
business’ income being in US Dollars. Forex concept even supports speculation. It also
facilitates carry trade as per which investors borrow low-yielding currencies and then lend,
which means invest in high-yielding currencies. This carry trade process, however, results in loss
of competitiveness in few nations.
Concepts like carry trade are complex. Hence, students can take forex assignment help from
our forex writers to understand them. The primary objective of our forex assignment writing
help is to make students well-versed with the knowledge of global investment and trade. So,
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How does a foreign exchange market operate?
According to our forex assignment help experts, in a usual foreign exchange transaction, a party
buys a quantity of one particular currency by paying a quantity of another currency. This
modernized foreign exchange market began to take shape during the 1970s when nations
gradually hoped on to floating exchange rates from the earlier exchange rate regime that
remained rigid as per the Bretton Woods System.
Concepts like the Bretton Woods System can be explained in details by our forex assignment
help experts if students avail forex assignment help from us.

 Its enormous trading volume that represents the largest asset class in the world, resulting
in high liquidity.
 Its geographical distribution on a wide scale.
 Its continuous operation for 24 hours a day, five days in a week, barring weekends. The
operation is precisely trading from 22:00 GMT on Sundays (Sydney) up to 22:00 GMT
on Fridays (New York). Our forex assignment help experts can throw more light on this
if you avail our forex assignment help service.
 The low margins regarding relative profit compared to other markets based on fixed
income.
 The usage of leverage for enhancing profit and loss margins and also with respect to
account size.

Economic factors that influence foreign exchange market.


The economics factors that influence foreign exchange markets are defined by our forex
assignment help experts. If you counter any trouble with the concepts, you can always contact
our forex assignment help experts for further online forex assignment help.

 Economic policy – This factor is spread openly by central banks and government
agencies.
 Economic conditions – This factor is usually revealed through economic reports.
 Other economic indicators – They include factors like inflation levels and productivity of
an economy.

Avail our forex assignment help to get detailed knowledge on these factors

Currency distribution as per the global forex market turnover.


Our forex assignment help experts share data of some nations whose currencies have been most
traded by value. You can understand the factors behind this by availing our forex service.

1. United States Dollar: Its ISO 4217 Code is USD and its daily percentage share as of April 2013 is
87 percent
2. Euro: Its ISO 4217 Code is EUR and its daily percentage share as of April 2013 is 33 percent
3. Japanese Yen: Its ISO 4217 Code is JPY and its daily percentage share as of April 2013 is 23
percent
4. Pound Sterling: Its ISO 4217 Code is GBP and its daily percentage share as of April 2013 is 12
percent
5. Australian Dollar: Its ISO 4217 Code is AUD and its daily percentage share as of April 2013 is
8.6 percent
6. Swiss Franc: Its ISO 4217 Code is CHF and its daily percentage share as of April, 2013 is 5.2
percent
7. Canadian Dollar: Its ISO 4217 Code is CAD and its daily percentage share as of April, 2013 is 4.2
percent
8. Mexican Peso: Its ISO 4217 Code is MXN and its daily percentage share as of April, 2013 is 2.5
percent
9. Chinese Yuan: Its ISO 4217 Code is CNY and its daily percentage share as of April, 2013 is 2.2
percent
10. New Zealand Dollar: Its ISO 4217 Code is NZD and its daily percentage share as of April, 2013 is
2.0 percent
11. Swedish Krona: Its ISO 4217 Code is SEK and its daily percentage share as of April, 2013 is 1.8
percent
12. Russian Ruble: Its ISO 4217 Code is RUB and its daily percentage share as of April, 2013 is 1.6
percent
13. Hong Kong Dollar: Its ISO 4217 Code is HKD and its daily percentage share as of April, 2013 is
1.4 percent
14. Singapore Dollar: Its ISO 4217 Code is SGD and its daily percentage share as of April, 2013 is 1.4
percent