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SECTION IV - CHAPTER 27 - Foreign Exchange - Currencies

  1. Module - 44 Foreign Exchange & Currencies CMT LEVEL - I
  2. What is Foreign Exchange(Forex) Foreign exchange rate is the value of foreign currency relative to domestic currency Exchange of currencies is done in the foreign exchange market, which is one of the biggest financial market
  3. Exchange Rate Base Currency • First currency in a currency pair Terms Currency • Second currency in a currency pair
  4. Example of Exchange Rate Base Currency Term Currency Relationship US Dollar Indian Rupees (US$ - INR) British Pound INR (GBP – INR) Japanese Yen US $ (JPY – USD)
  5. Currency Table USD EUR GBP JPY USD 1 0.7468 0.6627 99.19 EUR 1.339 1 0.8869 132.66 GBP 1.509 1.1275 1 149.53 JPY 0.0101 0.0075 0.0067 1
  6. Factor affecting Exchange Rate Fundamental Factor Economy Government Policies Technical Factor Interest Rates Inflation Rate Exchange Rate Policy Central Bank Intervention Political Factor Speculation
  7. Why Currency Derivative? Transparency & Efficient Price Discovery Elimination of Counter Party Risk Access to all type of Market Participant Standardized Product Trading Platform
  8. Participants in Currency Trading Importers & Exporters Hedgers Speculators Traders Arbitragers