Foreign Exchange Market - provides physical and institutional structure through which money of one country is exchanged for that of another country
Geographical extent
Spans globe
In some countries a portion of FX trading is by open biding
Highly developed communication networks
Functions
Transfer purchasing power
Credit for international trade transactions
Hedging facilities for transferring foreign exchange risk to someone else more willing to carry risk
Participants
Bank & non-bank FX dealers
Individuals and firms
Speculators
Arbitrages
CB's and treasures
Transactions
Interbank market
Client/retail market
Spot
Forward
Swap
Forward-Forward Swap
Non-deliverable forward
FX rates and quotations
Interbank quotations
Direct/indirect quotes
Bid/Ask quotations
Bid-price in one currency at which a dealer will buy another currency
Ask-price at which a dealer will sell currency
European terms
American terms
Direct-home currency price of a unit of foreign currency
Indirect-a foreign currency price of a unit of home currency