Submitted by: Aeman Hassan

L1F17BSAF0085
 “FOREX TRADING”

What is Forex?
Exchange rate is the rate that one currency pays to
another. It is this exchange rate that drives the Forex
market.
There are 180 official currencies in the world. However,
most currency transactions and payments are made in US
dollars, British pounds, Japanese yen, and euros. Other
popular currency trading tools include the Australian
dollar, Swiss franc, Canadian dollar and New Zealand
dollar.
Currency unit; It can be bought and sold through spot transactions, futures, swaps and
options. The main instrument is the currency. Foreign exchange transactions take place
around the world, five days a week, 24 hours a day.

Forex Market:
The foreign exchange market is the largest financial market in the world, and even larger than
the stock market, with daily turnover of $ 6.6 trillion. A digital site that exchanges one
currency for another, the foreign exchange market has many unique features that may
surprise new traders.

Forex Trading:
Currency exchange can be interpreted as a network of buyers and sellers transferring
currencies at an agreed exchange rate. This shows how people, businesses, and central banks
convert one currency into another; If you are traveling abroad, you have likely made a
currency transaction.
There are three different types of currency transactions:
Spot forex market:
The physical change of a currency pair at a specific point in the transaction (ie "in place" or
within a short period of time).
Forward forex market:
In the contract, it is stated that a certain amount of foreign currency is bought and sold at a
certain price and closed on a certain date in the future or on a certain date in the future.
Future forex market:
The contract agrees to buy or sell a certain amount of a certain currency at a specified price
and date in the future. Unlike futures contracts, futures contracts are legally binding.
Role of Commercial Banks in Forex Market:
Commercial banks are an important part of the foreign exchange market as they not only
operate on behalf of themselves and clients, but they also provide channels through which all
other participants must operate. They are actually the best-selling commodities in the foreign
exchange market.
Following are the banks in Pakistan that provide services in foreign currency
transactions:

HBL (Habib Bank Limited):

HBL FX consists of an interbank service desk and TMU and offers clients a complete
package of forex products on the market. HBL's global network of branches and agencies,
and the most active currency volume in the market, ensures the best exchange rate and
excellent delivery for all types of currency customers. Products provided:
Ready Purchase/Sale
The Treasury Marketing Division (TMU) provides all businesses and commercial customers
with current market exchange rates for all tertiary currency transactions of $ 5,000 and above.
Prices on the rates page are applicable for amounts less than $ 5,000 / - or equivalent
amounts.
In addition to standard transactions, clients can also calculate their future risk through
forward purchase / sale transactions, and the warehouse determines the interest rate for
futures purchases / sales.
Forward Purchase/Sale (Import/Export)
Clients can hedge future currency risks to hedge against fluctuations in the US dollar or other
currency. Futures contracts with fully fixed options can be booked for up to six months.
Outward Forward Sale (OFS)
Certain letter of credit importers can set the price of their forward debt in advance to avoid
fluctuations and fluctuations in prices.
Outward Forward Purchase (OFP)
The issuer can set revenue expenses for subsequent documents (letters of credit or
agreements). These facilities help protect sources of supply from adverse price fluctuations
and can be used as hedging tools.
Foreign Bill Discounting(FBD)
Customers can submit export invoices on the same day and use Rupee services. The bank
purchases documents and receives US dollar bills ranging from 12 days to 180 days,
depending on the maturity date. Regardless of the amount/currency, all agreements will be
registered with TMU by phone.
Foreign Currency Finance (FCF)
Foreign Currency Finance (FCF) are products developed for exporters who can use foreign
currency loans at LIBOR-based interest rates for up to six months.
Foreign Currency Import Finance (FCIF)
Foreign Currency Import Finance (FCIF) is a product developed for importers who can use
foreign currency loans at LIBOR-based interest rates for up to six months. The instrument is
acquired under DA or Sight L / C and can be adjusted according to the spot exchange rate
prevailing during the financing period.
Foreign Currency Bill Purchase (FCBP)
The FCBP facility provides first class foreign currency financing to our export customers.
The loan is adjusted by deducting the invoice amount from the export document for LIBOR
in addition to the determined period difference.

Faysal Bank:
 Currency options: the US dollar, the British pound, and the euro.
 The minimum required balance is $ 500 or its equivalent in other currencies.
 Access to your account nationwide through any of the Faisal Bank branches.
 Access to your account 24 hours a day through Faisal Bank's call center.
 Service fees are in line with Faisal Bank's spending plan.

MCB (Muslim Commercial Bank)

The MCB FX (foreign exchange) service desk is responsible for the currency risk of the bank
and its clients. It also manages the interest rate risk associated with banks' foreign exchange
portfolios. MCB FX Desk offers competitive exchange rates for all major currency pairs.
MCB's huge network and stable forex trading volume make it a leader in the interbank forex
market. An excellent credit rating ensures that the bank has a wide network of counterparties.
The bank also has an extensive network of NOSTRO accounts around the world, with
correspondent banks corresponding to all possible currencies. The MCB FX service desk
product portfolio includes direct transactions (spot, spot, futures) and currencies in major
currencies.

EXIM Bank of Pakistan:

The Export-Import Bank will provide exporters, companies and small and medium-sized
enterprises with a wide range of services, from pre-shipment services to post-shipment
working capital financing and export credit insurance benefits, in order to increase the
confidence of exporters. National exporters open up new markets. For medium and long-term
loans, EXIM will also provide credit lines that can be used to expand projects or establish
new businesses. Banks can obtain loans from domestic or foreign financial institutions to
meet loan demand, and can also issue short-term or long-term financial instruments to sell to
financial institutions and the public.
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