The Foreign Exchange Market

0 Introduction of Foreign Exchange Market In international transactions, international business is slightly different from domestic business using multiple currencies. For example, if a UK company buys a particular item from a US company, international transactions need to exchange pounds and dollars related to the foreign exchange market. In the foreign exchange market, countries that want to deal with foreign countries need to convert their currency into foreign currency that you would like to cooperate with through foreign exchange.

Foreign exchange markets, such as the markets of other products, include foreign buyers and sellers. The operation of the foreign exchange market arises from the requirement for customers to send and receive remittances to other countries. However, since most transactions involve business, it is done at a bank that conducts foreign exchange transactions. Banks are trading large and frequently with other banks through the Exchange Brokers agency, and these transactions are giving importance to the market. In addition, there are other transactions being done in the foreign exchange market. All transactions in the exchange market can be divided into five categories.

Geographical range of foreign exchange market 138 Functions of foreign exchange market 139 Market participant 140 Interbank market transaction 142 Exchange rate and estimate 148 Summary point 156 Mini case: Venezuelan Bolivar black market 157 question D question Internet practice 160 chapters What? International Equality Condition 164 Price and Exchange Rate 164 Interest Rates and Exchange Rates 172 Futures Exchange Rate as Unbalanced Forecast of Exchange Rates of Future Spots 181 Balanced Exchange Rates, Interest Rates and Exchange Rates 183 Summary Points 184 Mini Case: Currency transfer rate Internet exercise 186 Appendix: Introduction to algebra of international equality conditions 193

Geographical range of foreign exchange market 138 Functions of foreign exchange market 139 Market participant 140 Interbank market transaction 142 Exchange rate and estimate 148 Summary point 156 Mini case: Venezuelan Bolivar black market 157 question D question Internet practice 160 chapters What? International Equality Condition 164 Price and Exchange Rate 164 Interest Rates and Exchange Rates 172 Futures Exchange Rate as Unbalanced Forecast of Exchange Rates of Future Spots 181 Balanced Exchange Rates, Interest Rates and Exchange Rates 183 Summary Points 184 Mini Case: Currency transfer rate Internet exercise 186 Appendix: Introduction to algebra of international equality conditions 193