FOREX Market Where FOREX (different currencies) is(are) traded As a result of these transactions, FOREX rates between different currencies are determined for example, 1 AUD/0.5185 USD FOREX management is implemented FOREX activities are based on supply and demand
FOREX Market ◼ Where FOREX (different currencies) is (are) traded. ◼ As a result of these transactions, FOREX rates between different currencies are determined, for example, 1 AUD / 0.5185 USD. ◼ FOREX management is implemented. ◼ FOREX activities are based on supply and demand
Market Characteristics Largest financial market in the World -1.2 trillion Usd traded daily in 2001 Highly integrated Operates 24 hours a day London, New York and tokyo dominate the market activity (75%o of turnover
Market Characteristics ◼ Largest financial market in the world – 1.2 trillion USD traded daily in 2001. ◼ Highly integrated. ◼ Operates 24 hours a day. ◼ London, New York and Tokyo dominate the market activity (75% of turnover)
FOREX Market Structure TWo tiers Interbank market wholesale large transactions Retail market small scale transactions
FOREX Market Structure Two tiers: ◼ Interbank market - wholesale, large transactions ◼ Retail market - small scale transactions
Where s The market? An over-the-counter(OTC) market There is no one market place a Transactions occur in trading rooms by telephone, telex, computer, automated dealing systems Trades must be conducted by authorised dealers(80-90), licensed by the rba
Where Is The Market? ◼ An over-the-counter (OTC) market. ◼ There is no one market place. ◼ Transactions occur in trading rooms by telephone, telex, computer, automated dealing systems. ◼ Trades must be conducted by authorised dealers (80-90), licensed by the RBA
Market Participants Bank and non-bank dealers Individuals and firms exporters/importers Tourists Speculators/ arbitragers a Central banks foreX brokers
Market Participants ◼ Bank and non-bank dealers ◼ Individuals and firms - exporters/importers ◼ Tourists ◼ Speculators/arbitragers ◼ Central banks ◼ FOREX brokers