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FOREIGN EXCHANGE MARKET

Students of SYBFM presents the topic:-

GROUP MEMBERS

POOJA PARIKH DIVYA RAJA PRIYANKA PATIL KRIMA HINAL PATEL

(521) (520)

INTRODUCTION
Financial

market huge for trading of world currencies. It has been working since the 70s of the twentieth century Daily volumes exceeds 4 trillion dollars Main currency US$

According to Kindleberger, "It is place where foreign moneys are bought and sold. The foreign exchange market provides the foreign currency against any national currency

UNIQUENESS OF FOREX MARKET

Its

huge trading volume, leading to high liquidity Its geographical dispersion Its continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday The variety of factors that affect exchange rates The low margins of relative profit compared with other markets of fixed income The use of leverage to enhance profit margins with respect to account size

HISTORY
Historically the value of goods was expressed through some other goods In different places everything from teeth to jewelry has served this purpose but later metals, and especially gold and silver, were introduced as an accepted means of payment, and also a reliable form of value storage. Coins were basically minted from the metal, but stable political systems introduced a paper form of IOUs (I owe you) Before First World War most central banks supported currencies with gold.

Closure to the the end of second world war the Bretton woods agreement was signed in July in US 1944 The Bretton Woods agreement resulted in a system of fixed exchange rates The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties The EEC (European Economic Community) introduced

FUNCTIONS
A. B. C. D. E. F. G.

Transfer function Credit function Hedging Primary function International transactions Currency value Investment

ADVANTAGES OF FOREX
1. 2. 3. 4. 5.

High leverage No commission High liquidity Profitability 24hrs trading

DISADVANTAGES OF FOREX
1. 2.

High leverage 24hrs trading

MARKET SIZE
As

of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion The $3.98 trillion break-down is as follows: $1.490 trillion in spot transactions $475 billion in outright forwards $1.765 trillion in foreign exchange swaps $43 billion currency swaps $207 billion in options and other products

FOREX INSTRUMENTS
SPOT

ETFs

FORWARD

Forex instruments

OPTION

FUTURE

SWAP

CURRENCIES TRADED

Major
EURO USD $ GBP CHF Sfr

Minor
AUS $ NZD $ CAN $ INR Rs.

CURRENCIES TRADED
Rank 1 2 3 5-6 5-6 5-6 7 8 4 United States dollar Japanese yen Euro Currency % Daily share 84.9 39.1 19.0 12.9 7.6 6.4 5.3 2.4 2.2 18.6 200 1.6

Australian dollar Canadian dollar Swedish krona Swiss franc

Pound sterling

Hong Kong dollar New Zealand dollar Other currencies Total

9-10

WORKING OF FOREX
y y y y

Interbank quotations are given as :Bid Ask (also referred to as offer) Price maker Price taker

Quotes

Example : stated :

The exchange rate between US dollars and the Swiss franc is normally

CHF/USD: Fr 1.6000 (European terms) USD /CHF : $ 0.6250 (American terms)

CONTD
y y

Transactions Settlement
NOSTRO VOSTRO

SWIFT (Society for Worldwide Interbank Financial Telecommunications) NET OPEN POSITION- (NOP)
y y

position.

NAP also called LONG or Overbought NLP also called SHORT or Oversold
position.

The foreign exchange market consists of two tiers:

The interbank or wholesale market (multiples of $1MM USD or equivalent in transaction size) y The client or retail market (specific, smaller amounts)
y

MARKET PARTICIPANTS

Five broad categories of participants operate within these two tiers;

y y y y y

1. Bank and Nonbank Foreign Exchange Dealers 2. Individuals and Firms 3. Speculators and Arbitragers 4. Central Banks and Treasuries 5. Foreign Exchange Brokers

RBIS ROLE IN FOREX MARKET

1. 2. 3. 4. 5.

Exposure Limit Treasury operations at RBI RBIs Monitoring Intervention Foreign Exchange Exposure Limit(FEEL)

TOP TRADERS OF THE MARKET (MAY 2010)

Rank 1 2 3 4 5 6 7 8 10 9 Deutsche Bank Barclays Capital Royal Bank of Scotland JP Morgan HSBC Citi Bank UBS AG Name Market Share(%) 18.06 11.30 11.08 7.69 6.50 6.35 4.55 4.44 4.28 2.91

Morgan Stanley

Goldman Sachs

Credit Suisse

COUNTRIES HAVING RESERVEof People's Republic S 1 China (2010)

2 3 4 5 6 7 8 9 Eurozone Republic of China (Taiwan) Saudi Arabia South Korea Hong Kong Singapore Thailand Algeria Germany Brazil India Russia Japan

Rank

Countries

Billion US$(end of month) $ 2648.3 (Sep 2010) $1118.1 (Oct 2010) $ 497.082 (Nov 2010) $ 383.38 (Sept 2010) $ 410 (Dec 2009) $ 753 (Sep 2010)

$ 293.35 (October 2010) $ 266.1(Sep 2010) $ 221.4 (Oct 2010) $ 159.1 (Sep 2010) $ 157 (Sep 2010) $ 221.4 (Oct 2010) $ 250 (Aug 2010) $ 287 (Oct 2010)

$ 300.214 (Nov 4, 2010)

10 11 12 13

Switzerland

This work is brought you by the initiative taken by www.fxbase.com in making forex trading customer aware about the forex market. Fxbase conduct webinar class for its forex customer and also teach through e-books and through team viewer etc. They are one of the fastest growing brokerage firm in Asia in 2012 and their service to their customer is at its peak. For more information about your e-book and Forex related question visit www.fxbase.com Start mobile forex trading visit www.fxbase.com Automate your forex trading let the professionals trade for you visit www.fxbase.com You complete solution for starting your own brokerage firm visit www.brokeragefactory.com We are a worldwide STP/ECN online brokerage company visit : visit www.fxbase.com Easy and secure transaction processes visit www.fxbase.com Provide our service for both individuals and corporate visit www.fxbase.com We offer Desktop trading, web trading and mobile trading for more information visit www.fxbase.com WE are regulated forex borker visit www.fxbase.com Lower spread fast execution and customer care is our passion visit www.fxbase.com

 Open Mini account, standard account, pro account as low as starting from 100$ visit www.fxbase.com Ask for Birthday offer to live chat agent visit www.fxbase.com Starting your own brokerage firm is simple and cost effective visit www.brokeragefactory.com