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 Customers buy