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MARKETS
Dushyant
2K14/MBA/21
Currency
Symbol
USD ($)
84.9%
Euro
EUR ()
39.1%
Japanese yen
JPY ()
19.0%
Pound sterling
GBP ()
12.9%
Australian dollar
AUD ($)
7.6%
Swiss franc
CHF (Fr)
6.4%
Canadian dollar
CAD ($)
5.3%
HKD ($)
2.4%
Swedish Krona
SEK (kr)
2.2%
10
NZD ($)
1.6%
11
KRW ()
1.5%
12
Singapore dollar
SGD ($)
1.4%
13
Norwegian Krone
NOK (kr)
1.3%
14
Mexican Peso
MXN ($)
1.3%
15
Indian rupee
INR ( )
0.9%
12.2%
Name
Market Share
Deutsche Bank
15.64%
Barclays Capital
10.75%
UBS AG
10.59%
Citi
8.88%
JP Morgan
6.43%
HSBC
6.26%
6.20%
Credit Suisse
4.80%
Goldman Sachs
4.13%
10
Morgan Stanley
3.64%
Participants:
Corporates
Commercial banks
Exchange brokers
Central banks
Settlement of Transactions
SWIFT
Settlement of Transactions
CHIPS :
Clearing House Interbank Payment
System- an electronic payment system
owned by 12 private commercial banks
constituting New York Clearing House
Association
CHAPS
Spot Market
Sell/ Ask
For example:
At Mumbai foreign exchange market , the
US dollar is quoted as:
USD 1 = Rs. 45.1525/1650
Spot (bid) = Rs. 45.1525/$
Spot
Rs. low:
45.1650/$
Rule(ask)
: =
Buy
Sell high
For example:
At Mumbai foreign exchange market , the
quotation are made as:
Rs. 100 = USD 2.0762/0767
Spot (bid) = $ 2.0767/Rs.100
Spot (ask) = $ 2.0762/ Rs.100
Spread
Ask and bid differential is called the spread
When quotes are direct :
Spread = Ask Bid
When quotes are indirect :
Spread = Bid Ask
Spread represents cost of transaction
It is represented by the percentage of spread
and is
given by:
1.[( Ask- Bid)/ Ask] x 100 when quotes are
direct
Determinants of Spread
The currency being traded
The volume of currency being traded
The nature of organisation making
quotes
Overall perception of the Dealer about
the
conditions of the economy and forex
market
Usually these spreads are regulated by
Forward Market
Contracted
Rate (Rs.)
Unanticipated
Change
Profit/Loss
(Rs.)
46.5500
46.3500
-0.200 - 20,000.00
46.4500
46.3500
-0.100 - 10,000.00
46.3500
46.3500
0.000
0.00
46.2500
46.3500
0.100
10,000.00
46.1500
46.3500
0.200
20,000.00
Traders
Arbitrageurs
Hedgers
Speculators
Banks
Governments
Cross Rates
The exchange rate which is obtained by cross
product of two exchange rates is called Cross
Rate
Spot rate at Mumbai :S(Rs./$) = 31.2022/$
Spot rate at Frankfurt : S(Rs./DM) = 15.87 /
DM
Then Cross Rate = S(DM/$) = DM 2.0983/$
nostro account
Bill Rate
Rate applied for a foreign bill purchased or
payment
against import bill
Bill Buying rate: Basic rate (+ or -) Forward
Premium ( Discount) for
transit
period plus usance period
Exchange margin
Bill selling rate = TT selling rate + service
GBP
45.9350/9450
75.7150/7450
JPY
EUR
59.8500/9025
65.9900/66.0225