foreign exchange market

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Foreign exchange market

Largely banks that serve firms and consumers who may wish to buy or sell various currencies.

Foreign Exchange Market

A market for the trading of currencies. For example, one may buy dollars or sell pounds on a forex market. Foreign exchange is one the largest and most liquid markets in the world. Trading occurs over-the-counter, and most of the major players are governments, banks, and speculators. Forex markets are often used in hedging strategies.

foreign exchange market

a MARKET engaged in the buying and selling of FOREIGN CURRENCIES. Such a market is required because each country involved in INTERNATIONAL TRADE and investment has its own domestic currency and this needs to be exchanged for other currencies in order to finance trade and capital transactions. This function is undertaken by a network of private foreign exchange dealers and a country's monetary authorities acting through its central banks.

The foreign exchange market by its very nature is multinational in scope. The leading centres for foreign exchange dealings are London, New York and Tokyo.

Foreign currencies can be transacted on a ‘spot'basis for immediate delivery (see SPOT MARKET), or can be bought and sold for future delivery (see FORWARD MARKET). Some two-thirds of London's foreign exchange dealings in 2000 were spot transactions.

The foreign exchange market may be left unregulated by governments, with EXCHANGE RATES between currencies being determined by the free interplay of the forces of demand and supply (see FLOATING EXCHANGE RATE SYSTEM), or they may be subjected to support buying and selling by countries' central banks in order to fix them at particular rates (see FIXED EXCHANGE RATE SYSTEM).

foreign exchange market

a MARKET engaged in the buying and selling of FOREIGN CURRENCIES. Such a market is required because each country involved in INTERNATIONAL TRADE and FOREIGN INVESTMENT has its own domestic currency, and this needs to be exchanged for other currencies in order to finance trade and capital transactions. This function is undertaken by a network of private foreign exchange dealers and a country's monetary authorities acting through its central banks.

The foreign exchange market, by its very nature, is multinational in scope. The leading centres for foreign exchange dealings are London, New York and Tokyo.

Foreign currencies can be transacted on a ‘spot’ basis for immediate delivery (see SPOT MARKET) or can be bought and sold for future delivery (see FUTURES MARKET). Some two-thirds of London's foreign exchange dealings in 2004 were spot transactions.

The foreign exchange market may be left unregulated by governments, with EXCHANGE RATES between currencies being determined by the free interplay of the forces of demand and supply (see FLOATING EXCHANGE RATE SYSTEM), or they may be subjected to support-buying and selling by countries’ CENTRAL BANKS in order to fix them at particular rates. See FIXED EXCHANGE RATE SYSTEM, TOBIN TAX.

References in periodicals archive ?
After the latter half of the 1980s, there was a significant change in the methodologies employed to test the efficiency of foreign exchange markets and this was due to the development of the bivarite cointegration techniques of Engle and Granger (1987) and the multivariate cointegration techniques of Johansen (1988) and Johansen and Juselius (1990).
The plan is to offer a distributed ledger that can process financial transactions in the foreign exchange market.
The Bank of Zambia (BOZ) says it pumped US$ 178 million into the foreign exchange market to prevent the steep depreciation of the Kwacha and ensure foreign exchange market's stability.
The CFSI rose again slightly in late July and through August as the increased contributions Stress-Level Contributions of Component Markets to CFSI of equity and foreign exchange markets surpassed the declines in the securitization, credit, and real estate markets.
They are as follows: (a) a well-developed foreign exchange market; (b) a nominal anchor for monetary policy to replace the fixed exchange rate; (c) policy for central bank intervention in the foreign exchange market, that is the practice of buying or selling the local currency to influence its exchange rate; and (d) an exchange rate risk management mechanism for monitoring and managing both public and private sectors exposure.
Japan's top financial officials have said the country will continue to intervene in foreign exchange markets, claiming the intervention is aimed at stemming volatile exchange rate fluctuations.
Shiokawa also said the yen did not make any big moves in the foreign exchange market, the official said.
While nobody can instantly establish law and order throughout Russia, the IMF can - and should - insist that it be established in foreign exchange markets.
monetary authorities intervened in the foreign exchange markets, selling a total of $833 million against the Japanese yen.
The Microstructure of Foreign Exchange Markets, edited by Jeffrey A.
I asked him about a story in that morning's Gleaner (Jamaica's newspaper of record) which reported that the Bank of Jamaica was considering taking a $24 million loan from the World Bank to defend the declining Jamaican dollar on the foreign exchange markets.
Analysts said that South Africa's central bank would consider intervening in foreign exchange markets to ensure 'orderly market conditions.

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