foreign exchange market


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Related to foreign exchange market: Foreign Exchange Rates

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 ?
In his opening remarks, East AFRITAC s Monetary and Operations Advisor, Elias Kasozi, highlighted the importance of an appropriate exchange rate policy framework, professionalism and skills on the part of staff that interface with the market, internal organizational arrangements for strategic and tactical decision making and the role of information and telecommunications technology in foreign exchange market operations.
As per the CBTT stated that it has been actively and aggressively moving further to address the circumstance and that in the last three and a half months it has deal with US$500 million to the banking sector to relieve tensions in the domestic foreign exchange market.
This conclusion is based on the insurance analogy; while hedges can be considered insurance, there is no participant in the foreign exchange market that corresponds to the insurance company.
James McGeehan, who spent 12 years working in the City and now runs a US advisory firm, said: "The foreign exchange market is like the Wild West.
The probe comes amid concerns about the lack of regulation in the foreign exchange market, which is the biggest in the financial system.
Noting that the yen's strength is a spillover of the debt problems in the eurozone, through increasing risk aversion among global investors who see the Japanese currency as relatively safe, Shirakawa said in a speech, ''the Ministry of Finance intervened in the foreign exchange market today.
SANA'A, March 16 (Saba)- The Central Bank of Yemen (CBY) imposed Wednesday significant sanctions on ten exchange companies that have not committed to the prices in the foreign exchange market.
Singh said that the most immediate cause of worry is the volatility in the foreign exchange market.
The legislation has thus far stipulated that trading in the foreign exchange market should be done with only ten currencies.
Further, NBS interventions do not target a particular level of the exchange rate, but aim to mitigate excessive daily volatility in the foreign exchange market and preclude disruptions in operation prompted by insufficient trading, as well as to ensure that financial and price stability is not put into jeopardy.
As in the past, the Bank of Israel will continue to operate in the foreign exchange market in situations of exchange rate fluctuations, which are not in line with fundamental economic conditions or when the foreign exchange market is disorderly.
The goal of the foreign currency policy of the National Bank is to support stability at the foreign exchange market.

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