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  • 813d3fx1 Market

    Transféré par

    Lalit Agrawal
    43 vues15 pages
    The document provides an overview of foreign exchange markets, including key drivers of growth in FX markets like globalization and increased cross-border investments. It discusses the structure of FX markets, major participants like central banks, commercial banks, corporations and investors. It also defines important FX terms, describes the types of FX transactions like spots, forwards and swaps, and factors that influence spot exchange rates.

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    The document provides an overview of foreign exchange markets, including key drivers of growth in FX markets like globalization and increased cross-border investments. It discusses the structure of FX markets, major participants like central banks, commercial banks, corporations and investors. It also defines important FX terms, describes the types of FX transactions like spots, forwards and swaps, and factors that influence spot exchange rates.

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    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PPT, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    43 vues15 pages

    813d3fx1 Market

    Transféré par

    Lalit Agrawal
    The document provides an overview of foreign exchange markets, including key drivers of growth in FX markets like globalization and increased cross-border investments. It discusses the structure of FX markets, major participants like central banks, commercial banks, corporations and investors. It also defines important FX terms, describes the types of FX transactions like spots, forwards and swaps, and factors that influence spot exchange rates.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PPT, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 15

    Foreign Exchange Markets

    Namita Sahay Assistant Professor AIBS, Amity University

    Drivers of growth in the foreign exchange market


    Globalization of trade and investments Establishment of the WTO Buoyancy in cross-border investments: FDI and FIIs Surge in M& A and strategic alliances

    Definitions

    Foreign exchange Foreign exchange rate Trade weighted or Effective rates Concept of dollar as an investment, reserve, transaction, invoice and intervention currency. Vehicle currency Market makers

    Introduction to foreign exchange markets


    Is a virtual, OTC, 24 hr market,5 day a week. Communication: SWIFT, CHIPS, CHAPS Major market centres Purpose of FX markets ISO 4217 codes

    The Participants
    Classification I Individuals Businesses: Corporations, Traders Investors: Retail and Institutional Banks Government : central banks Facilitators: Primary dealers & brokers

    The Participants
    Classification II Individuals and Corporations can be classified as: Hedgers Arbitrageurs Speculators

    Participants in the market cont.


    Classification III According to BIS , the market participants in the foreign exchange market can be classified as: Dealers Other Financial Institutions Non-financial customers

    The Indian foreign exchange market: structure

    In India, foreign exchange transactions are carried out in three segments:


    Between the RBI and authorized dealers (ADs). The interbank market The retail segment

    Features of Forex market


    Size :$4.0 trillion average daily turnover Average daily turnover by instrument Average Daily Turnover by Geographic Location
    Average Daily Turnover by Currency Average Daily Turnover by Currency pair

    Market Infrastructure
    Dealings rooms Information and dealing systems Payment and communication systems Settlement and dealing locations

    The Indian foreign exchange market: trading platforms

    In India, there are four important platforms for the spot trading of currencies:

    FX-CLEAR FX Direct Reuters D2 Reuters Market Data System (RMDS)

    Definitions

    Base currency Variable currency Conventions in foreign exchange markets American and European terms Pip and Lot Transaction and settlement value Nostro, Vostro and Loro accounts

    Types of foreign exchange transactions


    Spot Forward: forward rate, forward premium or discount, annualized percentage forward premium/discount ,swap points Outright forward contract Swap transactions: spot-forward swap & forward-forward swap Application of Swap deals

    Forex quotations

    Bid rate Ask rate Spread Direct quotations Indirect Quotations Cross rate: rules for calculation of cross rates

    Factors affecting spot forex rates


    PPP theory Demand and Supply theory of Exchange Rate Balance of payment Relative interest rates Relative inflation rates Relative money supplies Other factors

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