FUNCTION OF FOREIGN EXCHANGE MARKET

TRANSFER FUNCTION

CREDIT FUNCTION

HEDGING FUNCTION

TRANSFER FUNCTION
THE FUNDAMENTAL FUNCTIONS OF FOREIGN EXCHANGE

MARKET TO EFFECT TRANSFER OF FUNDS OR PURCHASING

POWER FROM ONE COUNTRY TO ANOTHER. THIIS IS EFFECTED THROUGH VARIOUS INSTRUMENTS, SUCH

AS FOREIGN BILLS BANK DRAFTS TELEGRAPHIC TRANSFER

AND DIRECT DIALLING TELEPHONE SERVICES. IT IS FACILITIES SIMULTANEOUS INTERNATIONAL

SETTLEMENT OF CLAIMS IN BOTH DIRECTIONS.

CREDIT FUNCTION
IT IS FINANCING OF TRADE.

IT IS USUALLY REQUIRED GOODS ARE IN TRANSIT AND ALSO

TO ALLOW THE BUYER TO RESELL THE GOODS AND MAKE THE PAYMENT.

THE EXPORTS ALLOW 90 DAYS TO THE IMPORTED TO PAY.

THE FARMER GENERALLY GET IMPORTER OBLIGATIONS TO PAY DISCOUNTED THROUGH THE COMMERICIAL BANKS.

HEDGING FUNCTION
THE VARIATIONS IN EXCHANGE RATES RESULT IN A GAIN OR

LOSS TO THE CONCERNED PARTIES.

RISE IN THE EXCHANGE VALUE OF THE FOREIGN CURRENCY. ALL COMMERCIAL TRANSACTION COVERED BY HEDGE CONTRCT. WILL NOT CHANGE OR ALTERNATIVELY, IT IS POSSIBLE FOR THEM TO MAKE ACCURATE ANTICIPATION OF THE

DIRECTIONS OF ITS MOVEMENTS.