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 ?
The switch from fixity to flexibility of exchange rate entails the shift of liquidity management from intervention in the foreign exchange market to other monetary policy instruments such as open market operations.
Moreover, Mexico's financial problems appeared to be spreading to a number of other nations and adversely affecting the dollar in the foreign exchange markets.
The Australian foreign exchange market is the seventh largest in the world.
I'm not supposed to comment on a proper level (for the yen) in the foreign exchange market,'' Fukuda said.
The Manager for Foreign Operations reported on developments in foreign exchange markets and on System open market transactions in foreign currencies during the period September 27, 1994, through November 14, 1994.
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The central bank of Israel has said that it would widen its intervention in the foreign exchange market.
Finance Minister Kiichi Miyazawa hinted Thursday that Japan will resist excessive moves on the foreign exchange market by cooperating with other Group of Seven (G-7) countries.
The rapid pace of change in the foreign exchange market has created many new opportunities for profits.
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The major functions of the new department include: administering foreign exchange, regulating domestic foreign exchange market, conducting analysis on the global foreign exchange market and international capital flows, and advising to policy makers, the central bank said.
The Bank of Japan (BOJ) stepped into the foreign exchange market Monday morning by selling yen in a bid to buoy the falling dollar, a senior Finance Ministry official indicated.

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