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  • Foreign Exchange Markets AND Exchange Rate Mechanism

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    This document discusses foreign exchange markets and exchange rate mechanisms. It defines a financial market as a market where financial assets are bought and sold. Specifically, it defines the forex market as the market where foreign currencies are bought and sold. It then classifies forex markets according to period of settlement (spot vs. forward markets), nature of currencies (deep vs. shallow markets), and participants (interbank vs. corporate markets). It provides more details on spot and forward markets.

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    This document discusses foreign exchange markets and exchange rate mechanisms. It defines a financial market as a market where financial assets are bought and sold. Specifically, it defines the forex market as the market where foreign currencies are bought and sold. It then classifies forex markets according to period of settlement (spot vs. forward markets), nature of currencies (deep vs. shallow markets), and participants (interbank vs. corporate markets). It provides more details on spot and forward markets.

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    8 views7 pages

    Foreign Exchange Markets AND Exchange Rate Mechanism

    Uploaded by

    9986212378
    This document discusses foreign exchange markets and exchange rate mechanisms. It defines a financial market as a market where financial assets are bought and sold. Specifically, it defines the forex market as the market where foreign currencies are bought and sold. It then classifies forex markets according to period of settlement (spot vs. forward markets), nature of currencies (deep vs. shallow markets), and participants (interbank vs. corporate markets). It provides more details on spot and forward markets.

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    FOREIGN EXCHANGE MARKETS AND

    EXCHANGE RATE MECHANISM

    FINANCIAL MARKET

    MARKET IN WHICH BUYING AND SELLING OF FINANCIAL ASSETS TAKE PLACE

    TYPES OF FINANCIAL MARKETS

    FOREX MARKET

    MARKET IN WHICH THE BUYING AND SELLING OF FOREIGN CURRENCIES TAKE PLACE

    CLASSIFICATION OF FOREX MARKETS

    TYPES OF FOREIGN EXCHANGE MARKETS


    ACCORDING TO PERIOD OF SETTLEMENT: SPOT MARKET FORWARD MARKET ACCORDING TO NATURE OF CURRENCIES: DEEP MARKET

    SHALLOW MARKET MARKET


    ACCORDING TO PARTICIPANTS: INTERBANK MARKET CORPORATE MARKET

    FOREX MARKETS
    SPOT MARKET FORWARD MARKET

    FOREIGN CURRENCIES BOUGHT AND SOLD FOR IMMEDIATE DELIVERY. (TECHNICALLY, A SPOT DEAL HAS DELIVERY TWO* WORKING DAYS AFTER THE SPOT TRANSACTION
    *ONE WORKING DAY IN CASE OF USD/CAD

    FOREIGN CURRENCIES BOUGHT AND SOLD TODAY AT AN AGREED RATE WITH DELIVERY SOMETIME IN THE FUTURE

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