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    Currency Market

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    govardhan
    The document discusses currency markets and exchange rates. It defines currency markets as markets where national currencies are traded for one another. Major participants are commercial banks, forex brokers, and authorized dealers. Exchange rates are the price of one currency stated in terms of another. There are two main exchange rate systems - fixed rates where a government sets the rate, and floating rates where market forces determine the rate. Forward rates are set by future contracts while spot rates are the current rate. Many factors can influence exchange rates.

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    Currency Market

    Uploaded by

    govardhan
    106 views12 pages
    The document discusses currency markets and exchange rates. It defines currency markets as markets where national currencies are traded for one another. Major participants are commercial banks, forex brokers, and authorized dealers. Exchange rates are the price of one currency stated in terms of another. There are two main exchange rate systems - fixed rates where a government sets the rate, and floating rates where market forces determine the rate. Forward rates are set by future contracts while spot rates are the current rate. Many factors can influence exchange rates.

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    The document discusses currency markets and exchange rates. It defines currency markets as markets where national currencies are traded for one another. Major participants are commercial banks, forex brokers, and authorized dealers. Exchange rates are the price of one currency stated in terms of another. There are two main exchange rate systems - fixed rates where a government sets the rate, and floating rates where market forces determine the rate. Forward rates are set by future contracts while spot rates are the current rate. Many factors can influence exchange rates.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    106 views12 pages

    Currency Market

    Uploaded by

    govardhan
    The document discusses currency markets and exchange rates. It defines currency markets as markets where national currencies are traded for one another. Major participants are commercial banks, forex brokers, and authorized dealers. Exchange rates are the price of one currency stated in terms of another. There are two main exchange rate systems - fixed rates where a government sets the rate, and floating rates where market forces determine the rate. Forward rates are set by future contracts while spot rates are the current rate. Many factors can influence exchange rates.

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    You are on page 1of 12

    DIKSHA GUPTA F-15

    GOVARDHAN JILLA F-17


    AKASH K F-18
    SURBHI F-19
    SUKHI F-20
    WHAT IS CURRENCY MARKET

     Currency market is the market in which national


    currencies are traded for one another. Market in
    which foreign currencies are bought and sold.

     Major participant in this market are commercial


    bank, forex broker, & authorized dealers

     Besides, transfer of funds form one country to


    another speculation is important dimension of
    Currency market.
    WHAT IS EXCHANGE RATE ?

     A foreign exchange rate is the price of the


    domestic currency stated in terms of another
    currency.

     Example :
    $1 = Rs. 71
    1 Euro = Rs. 80.78
    1 yen = Rs. 0.63
    TYPE OF EXCHANGE RATE SYSTEM
    Fixed Exchange Rate

     Fixed exchange rate system refers to a system in


    which exchange rate for a currency is fixed by the
    government.
     The country makes sure that its value against
    the dollar, or other important currencies, remain
    the same.
     For example, China & Hong Kong maintains a
    fixed rate.
    TYPE OF EXCHANGE RATE SYSTEM
    Floating Exchange Rate
     Flexible or Floating exchange rate systems are
    ones whereby the rate of a currency is
    determined by the market forces of demand and
    supply.

     The central bank of the country may interfere in


    economically extreme situations such as the
    recession or boom to stabilize the currency.
     For example: India maintains use floating
    exchange system.
    FORWARD EXCHANGE RATE
     A forward rate is a one that is determined as
    per the terms of a forward contract. It stipulates
    the purchase or sale of a foreign currency at a
    predetermined rate at some date in the future.

     The forward rate is quoted at a premium or


    discount to the spot price.

     A forward contract freezes the rate of exchange


    for both the parties and thus eliminates the
    element of uncertainty.
    SPOT EXCHANGE RATE
     The spot rate is the current exchange rate for any
    currency. It is the rate at which your currency shall
    be converted if you decided to execute a foreign
    transaction “right now”.

     Trading at a spot rate does not require deep


    mathematical or statistical analysis. It is what it
    is.

     Spot rates can be a misleading indicator in times of


    economic crisis, unreasonable demand or supply
    patterns or temporary transitional phases in an
    economy.
    FACTOR INFLUNCE EXCHANGE RATE
    FOREIGN EXCHANGE MARKET IN INDIA

     The foreign exchange market in India started when


    in 1978 the government allowed banks to trade
    foreign exchange with one another.

     The Foreign Exchange Management Act, 1999 or


    FEMA regulates the whole Foreign Exchange
    Market in India.

     Before FEMA , the foreign exchange market in


    India was regulated by the Reserve Bank of India
    through the Exchange Control Department, by the
    Foreign Exchange Regulation Act or FERA, 1947.
    FOREIGN EXCHANGE MARKET IN INDIA
     Prior to 1992, Government of India strictly
    controlled the exchange rate. After 1992,
    Government of India slowly started relaxing the
    control and exchange rate became more and more
    market determined.

     A major step in development of Indian forex market


    happened in 2008, when currency futures (Indian
    Rupee and US Dollar) started trading at National
    Stock Exchange (NSE).
    STRUCTURE OF CURRENCY MARKET

    Main Stakeholders in Market

     Traders Traders are generally all individuals in the


    public who are also corporate customers of the
    banks. These customers use the banks as authorized
    dealers to access the forex market.
     Banks /Authorized dealers The banks, on the other
    hand, are the legally authorized institutions to
    handle currency.
     Reserve bank of India is the central financial
    institution which is responsible for the monetary
    policy in India.
    THANK YOU

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