The Foreign Exchange Market

Financial Markets ,[object Object],[object Object]

Global Financial Market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Financial Market ,[object Object],[object Object],[object Object]

Financial Market…… ,[object Object],[object Object],[object Object]

Financial Market…… ,[object Object],[object Object],[object Object],[object Object],[object Object]

Financial Market…… ,[object Object],[object Object]

Financial Market…… ,[object Object],[object Object],[object Object],[object Object]

Major Types of financial Markets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Financial Instruments ,[object Object],[object Object],[object Object],[object Object]

Financial Instruments ,[object Object],[object Object],[object Object],[object Object],[object Object]

Changes in Global Financial Markets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Foreign Exchange Market ,[object Object],[object Object]

Gold Standard ,[object Object],[object Object],[object Object],[object Object]

Agreement on Fixed Exchange Rate ,[object Object],[object Object],[object Object]

Floating Exchange Rate System ,[object Object],[object Object]

Exchange rate System in India ,[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The Foreign Exchange Market

It is a 24-hour market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

London is the largest market ,[object Object],[object Object],[object Object],[object Object]

How a Foreign Exchange Transaction is Conducted

From a 1998 publication by the NY Fed: ,[object Object],[object Object],[object Object]

Global Foreign Exchange Market Turnover Source: BIS Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity in April 2007.

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The Foreign Exchange Market Note: Data is from 2007.

Participants of FE Market ,[object Object],[object Object],[object Object]

Market Makers ,[object Object],[object Object],[object Object]

Central Banks ,[object Object],[object Object],[object Object],[object Object]

$ is the most important currency ,[object Object],[object Object]

Maintenance of Accounts by Banks ,[object Object],[object Object],[object Object],[object Object]

Depreciation of Currency Value ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Depreciation Factors ,[object Object],[object Object],[object Object],[object Object]

Appreciation of Currency Value ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Foreign Exchange Rates & Quotations ,[object Object],[object Object],[object Object],[object Object],[object Object]

Codes for selected Currencies required for quotes ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

European vs. American Quote (For Inter-bank Customers) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Direct vs. Indirect Quotes (For non-bank customers) ,[object Object],[object Object],[object Object],[object Object]

Rule to Earn Profit ,[object Object],[object Object],[object Object]

Foreign Exchange Transactions ,[object Object],[object Object],[object Object]

Bid & Ask Rates ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

How Bid/Ask spread can affect? ,[object Object],[object Object],[object Object],[object Object],[object Object]

Cross Exchange Rate ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Spot Market & Arbitrage ,[object Object],[object Object]

Arbitrage in Spot Market (Between Banks) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Inverse Quotes & Two-Point Arbitrage ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Cross Rates & Triangular Arbitrage ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Triangular Arbitrage…… contd. ,[object Object],[object Object],[object Object],[object Object],[object Object]

Learn how to compute Cross Rates ,[object Object],[object Object],[object Object]

Types of Contracts ,[object Object],[object Object],[object Object],[object Object]

Example of a Forward Contract ,[object Object],[object Object]

Example of a Forward Contract…… ,[object Object],[object Object],[object Object]

Measuring a change in Spot Exchange Rates ,[object Object]

Measuring a change in Spot Exchange Rates ,[object Object],[object Object]

Forward Exchange Rates ,[object Object],[object Object],[object Object]

Discounts & Premiums in the Forward Market ,[object Object],[object Object],[object Object],[object Object],[object Object]

CALCULATING THE FORWARD PREMIUM OR DISCOUNT ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Swap Transaction ,[object Object],[object Object]

Swap Transaction (Example) ,[object Object],[object Object],[object Object],[object Object]

Swaps in Foreign Exchange Market ,[object Object],[object Object],[object Object],[object Object]

Swap Margins & Swap Points ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Swap Margins & Swap Points…. ,[object Object],[object Object],[object Object]

Swap Margins & Swap Points…. (Guiding principles) ,[object Object],[object Object],[object Object],[object Object]

Swap Margins & Swap Points…. (Guiding principles) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Rule to compute outright forwards implied by a swap quotation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Forward – Forward Swaps ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Non-Deliverable Forward ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Short-Date Contracts ,[object Object],[object Object],[object Object],[object Object]

Short-Date Contracts….. ,[object Object],[object Object],[object Object]

Broken Date Contracts ,[object Object],[object Object]

Broken Date Contracts……(Example) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Exchange Rate Calculations (Indian Context) ,[object Object],[object Object],[object Object],[object Object]

Quotes for various Merchant Transactions (Indian Context)……. ,[object Object],[object Object],[object Object],[object Object],[object Object]

Quotes for various Merchant Transactions……. ,[object Object],[object Object],[object Object],[object Object],[object Object]

The Foreign Exchange Market

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Editor's Notes