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CHAP7A

CHAP7A

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Published by: rameshmba on Jun 14, 2008
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11/03/2012

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1
International Financial ManagementP G Apte
 
2
CURRENCY MARKETS
The foreign exchange market is the market in whichcurrencies are bought and sold against each other.
The interbank foreign exchange market is an over-the-counter (OTC) market. Daily turnover about $1.5trillion. Average transaction is about USD 4 million
The participants in the wholesale market arecommercial banks, investment institutions,corporations and central banks
.
Currency brokers actas middlemen between dealers
A small number of currencies account for bulk of turnover:
 
USD, GBP, EUR, CHF, CAD, JPY, DEM,AUD
 
3
CURRENCY MARKETS
Among the participants
,
primary price makers orprofessional dealers
 
make a two-way market to each otherand to their clients
Foreign currency brokers act as middlemen between twomarket makers. Their main function is to provideinformation to market-making banks
Corporations usually are price takers. However, some non-bank, non-financial companies do act as market makers.
Large money centre banks deal in a large number of currencies. Smaller banks have a restricted range.

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