Basics of FOREX Market final

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Basics of FOREX Market : 

Basics of FOREX Market

A Presentation by……… : 

A Presentation by……… Eppakayal Sarita 13108 Kulkarni Gayatri 13118 Raicha Komal 13132 Doddawad Shambhavi 13107

Do You Invest/Trade In Stock Markets? : 

Do You Invest/Trade In Stock Markets? Do you invest in stocks? Yes / No 2. Do you Invest in CURRENCIES? Yes / No If your first answer is ‘Yes’ and second is ‘No’, Then you are perhaps attempting to drive a car in the first gear only and in this case your journey,(to the wealth creation), can never be smooth…

What is Forex Market??? : 

What is Forex Market???

Emergence of FOREX Market : 

Emergence of FOREX Market

Slide 6: 

Countries dominating the FOREX Market…..

Players of FOREX Market : 

Players of FOREX Market RETAIL MARKET WHOLESALE MARKET OR INTERBANK MARKET TRAVELLERS TOURISTS CENTRAL BANKS COMMERCIAL BANKS FOREX BROKERS Investors and speculators

Now let us have a look on Forex Compared to other Markets (Daily turnover) : 

Now let us have a look on Forex Compared to other Markets (Daily turnover)

Slide 10: 

The foreign exchange market is unique because…

Slide 11: 

Why Trade Foreign Currencies? No commissions. No middlemen No fixed lot size. Low transaction costs A 24-hour market. No one can corner the market. Leverage. High liquidity. “Demo” accounts, news, charts and analysis. “Mini” and “micro” trading.

How to Read a Currency Quote : 

How to Read a Currency Quote currency pair base currency quote currency Bid price Ask Price

Types of Transactions : 

Types of Transactions Spot Transaction Forward Transaction Options

Spot Transaction : 

Spot Transaction This type of transaction accounts for almost a third of all FX market transactions.

Spot Transaction: How it works : 

Spot Transaction: How it works A trader calls another trader and asks for a price of a currency, say British pounds. This expresses only a potential interest in a deal, without the caller saying whether he wants to buy or sell. The second trader provides the first trader with prices for both buying and selling (two-way price). When the traders agree to do business, one will send pounds and the other will send dollars. By convention the payment is actually made two days later, but next day settlements are used as well.

Exchange Risks in Spot Transactions : 

Exchange Risks in Spot Transactions Suppose a U.S. company orders machine tools from a company in Japan. Tools will be ready in six months and will cost he time of the order, the yen is trading at 120 to a dollar. U.S. company budgets $1 million in Japanese yen to be paid when it receives the tools (120,000,00 yen /120 yen per dollar = $1,000,000)

Slide 17: 

There is no guarantee that the rate will remain the same six months later.Suppose the rate drops to 100 yen per dollar: Cost in U.S. dollars would increase (120,000,000 / 100 = $1,200,000) by $200,000. Conversely, if the rate goes up to 140 yen to a dollar: Cost in U.S. dollars would decrease (120,000,000 /140 = $857,142.86) by over $142,000

Slide 18: 

Forwards contract Futures Swaps

Slide 19: 

Futures: Foreign currency futures are forward transactions with standard contract sizes and maturity dates — for example, 500,000 British pounds for next November at an agreed rate. These contracts are traded on a separate exchange set up for that purpose. Swap: The most common type of forward transaction is the currency swap. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date.

Slide 20: 

Suppose a U.S. company needs 15 million Japanese yen for a three-month investment in Japan. It may agree to a rate of 150 yen to a dollar and swap $100,000 with a company willing to swap 15 million yen for three months After three months, the U.S. company returns the 15 million yen to the other company and gets back $100,000, with adjustments made for interest rate differentials Swap Transaction: How it works

Slide 22: 

Why USD is traded the Most???

Slide 23: 

Thank You

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