FOREIGN EXCHANGE

MARKET
The foreign exchange
market is the place where
one currency is bought or
sold for another currency

12/08/21 lecture - 1, IFM III unit 1

 FOREIGN EXCHANGE MARKET
TYPES & PLAYERS

WHOLESALE MARKET
RETAIL MARKET OR
INTERBANK MARKET

COMMERCIAL BANKS
FOREX BROKERS
TRAVELLERS CENTRAL BANKS
TOURISTS MNCs
INDIVIDUALS AND SMEs

12/08/21 lecture - 1, IFM III unit 2

 PLAYERS
RETAIL MARKET
• THE TRAVELLERS AND TOURISTS
EXCHANGE ONE CURRENCY FOR
ANOTHER IN THE FORM OF
CURRENCY NOTS OR TRAVELLERS
CHEQUES.

12/08/21 lecture - 1, IFM III unit 3

 PLAYERS
WHOLESALE MARKET
• COMMERCIAL BANKS
– participates in foreign exchange on behalf
of their clients
- At retail level enters through inter bank
market or through specialized brokers.
- At bulk level enters through inter-bank
wholesale market or international banks
and brokers
12/08/21 lecture - 1, IFM III unit 4
 PLAYERS
WHOLESALE MARKET
• FOREX BROKERS
– They act as agents who facilitate trading
between dealers.

12/08/21 lecture - 1, IFM III unit 5

 PLAYERS
WHOLESALE MARKET
• CENTRAL BANKS
– Central banks frequently intervene in the
foreign exchange market to maintain the
exchange rate at desired level

12/08/21 lecture - 1, IFM III unit 6

 PLAYERS
WHOLESALE MARKET
• MNCs
– MNCs are participating in forward
exchange market

12/08/21 lecture - 1, IFM III unit 7

 PLAYERS
WHOLESALE MARKET
• INDIVIDUAL
– They took part in foreign exchange market
for their investment and commercial
activities

12/08/21 lecture - 1, IFM III unit 8

 PLAYERS
WHOLESALE MARKET
• INDIVIDUAL
– They took part in foreign exchange market
for their investment and commercial
activities

12/08/21 lecture - 1, IFM III unit 9