FOREIGN EXCHANGE MARKET

AND
BOP & MONEY SUPPLY

PRESENTED BY:
AJISH.P.J
MBA,S3
JBS(09-11)
 THE FOREIGN EXCHANGE MARKET
A Foreign Exchange Transaction is a trade of one currency for another currency

The institutional set-up that facilitate the trading of currency is known as the
FOREIGN EXCHANGE MARKET or THE FOREX MARKET

It is not located in a physical space and does not have a central exchange

Rather ,it is an electronically linked network of a large number of individual

foreign exchange trading centers, in which the markets participants deal directly
with each other.

There is a large number of foreign exchanges trading centers in the world as

each country has its own centers

The latest development in foreign exchange trading is ELECTRONIC TRADING

-voice trading
-fast and reliable
-manage credit lines
 BOP & MONEY SUPPLY
 BOP is a measurement of all transactions between domestic
and foreign residence over a specific period of time
 There are positive and negative flows:
 Positive flows such as exports(sources of external purchasing
power)
 Negative flows such as imports(uses of external purchasing
power)
 A surplus in BOP results in an increase in the money supply in
the economy
 A deficit in BOP results in a decrease in money supply
THANK YOU