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Foreign Exchange Market (Foreign exchange dealers (banks, nonbank foreign…
Foreign Exchange Market
the client or retail market
usually for specific amounts, sometimes down to the last penny
Largest financial market
transactions worldwide averages over $1 trillion daily
“interbank” market
buy and sell deposits denominated in foreign currencies
transactions are conducted over the telephone or via an electronic network
Foreign exchange dealers
banks
nonbank foreign exchange dealers
maintaining an inventory position
Speculators
seek all of their profit from exchange rate changes
Arbitragers
try to profit from simultaneous exchange rate differences in different markets
hedging instruments
options
“a put”
"a call"
futures
swaps