Amity Business School

Amity Business School

 Foreign Exchange Market
Amity Business School

Foreign Exchange Market or Forex

Market is a market where foreign
currencies are brought and sold.

It’s a newest component of

Financial Market that has undergone
drastic transformation.

The distinct feature of Forex Market

are:

➢ It is Over the counter Market

➢ Operates round the clock
➢ Highly Liquid Market
 Amity Business School

Central Bank

Commercial Banks

Individuals & Firms

Foreign Speculators
Exchange
Market Arbitrageurs
Participants
International Organizations
 Amity Business School

Types of Foreign Exchange Market

Spot Market Forward Market

Currency are delivered at some

Immediate delivery of the currency
future date
 Amity Business School

Forward
Spot Rate Cross Rate
Rate

The rate between

two currencies,
The rate where The rate where both of which are
not the official
payment is done payment will
currencies of the
immediately occur at a some country in which
future date the exchange rate
quote is given.
Amity Business School
 Quotation Amity Business School

Direct In-Direct
Quotation Quotation

Home Currency is Variable Unit Foreign Currency is Variable Unit

e.g. e.g.
₹ 72/$ $0.0138/ ₹
 Amity Business School

Currency speculation in Spot Market

means buying and holding a currency for
sale at a higher rate in the near future

Currency arbitrage in spot market means

taking advantage of difference in price of
currency in two different markets.
Buying a currency at cheaper rate in one
market and selling at a higher rate in
another market
Amity Business School