foreign exchange market

(redirected from Currency Trade)
Also found in: Dictionary.
Related to Currency Trade: Foreign exchange market

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 ?
Information Minister Fawad Chaudhry, a couple of days back, had announced on Twitter that 'a full-fledged operation against dollar hoarding and speculative currency trade' would be launched by the FIA as panic had started appearing in foreign currency markets after the dollar rate reached Rs148 in open trading on Friday.
Government has directed FIA to launch a full fledged operation against Dollar hoarding, and speculative currency trade the operation is being launched in coordination with State Bank and ministry of Finance
BMO Financial Group said its new RMB Hub for the Americas has initiated the first Chinese currency trade. The first hub for North and South America allows financial institutions to purchase the Chinese RMB currency through Canada on the open market, on behalf of their clients.
The idea of having a mechanism to regulate currency trade was first raised during a senior ASEM officials meeting in Bangkok last October.
Signs of panic are now appearing in foreign currency markets as the dollar touched Rs148 in open trading in Pakistan and the information minister announced that "a full-fledged operation against dollar hoarding and speculative currency trade" is going to be launched.
The Federal Investigation Agency (FIA) on Sunday seized currency worth Rs40 million and arrested three people in Lahore, the interior ministry said, as a government crackdown against the hoarding of US dollars and speculative currency trade gained momentum.
Among the banks with highest currency trade generation are Credit Suisse Group (NYSE:CS), Goldman Sachs (NYSE:GS), Deutsche Bank (NYSE:DB) and Barclays Bank (NYSE:BARC).
Among the main reasons for the growth in profit of the banks is their successful currency trade.
These effects are statistically significant and imply that two countries that share the same currency trade three times as much as they would if they had different currencies.
Currency trades tend to be highly leveraged and hence can create losses far higher than the initial amount bet.
The automaker is among a growing number of corporations using FXGO to find transparent pricing, execute currency trades and hedge foreign exchange risk.
Chinese currency trades as CNY in onshore markets and CNH in offshore markets.