文档介绍：Chapter 3
Foreign Exchange Market and Foreign Exchange Rate
Foreign Exchange Market
Foreign exchange is another country’s money. The dynamic meaning of the foreign exchange refers to the act of trading different country’s currencies.
Convertibility is the most important characteristic of the foreign exchange.
Foreign exchange rate is the price of one currency in terms of another.
Foreign exchange market is the place where currencies are bought and sold.
Foreign exchange market has two functions: the first is to convert one currency into another; the second is to provide insurance against foreign exchange risk.
The foreign exchange market is an informal, over-the-counter and around-the-clock market.
It has no centralized meeting-place and no formal requirements for participation.
The market never sleeps. Tokyo, London, and New York are all shut for only 3 hours out of every 24. During these three hours, trading continues in a number of minor centers, particularly San Francisco and Sydney.
Measuring foreign exchange market activity: Average electronic conversions per hour
The foreign exchange market is by far the largest financial market in the world.
As of 2009, more than $3 trillion are traded in this market on a daily basis. This was a massive increase of nearly 70% over the 2004 survey’s estimate of $ trillion.
The . dollar was involved in more than 90% of all foreign exchange transactions, followed by the euro (38%), yen (23%), and British pound sterling (13%).
London is the largest world foreign exchange market, followed by New York and Tokyo. London accounts for % of daily world exchange. New York is about 16%.
Global foreign exchange market turnover, 1989-2007 (daily averages in April, billions of . dollar)
Top 10 geographic trading center in the foreign exchange market, 1992-2007 (daily averages in April, billions of $)
Foreign exchange
market structure
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