商务英语综合教程课件杜凤秋 ISBN9787810788113 PPT international economychap.14 functions of foreign exchange market.pptVIP

Functions of Foreign Exchange Market Functions of Foreign Exchange Market Foreign exchange market is a market for converting the currency of one country into that of another country. The major participants in the foreign exchange market are large commercial banks that operate at two levels----retail and inter-bank. At the retail level, they deal with bank customers who want to buy or sell foreign exchange. At the inter-bank level, they trade in foreign exchange with other domestic and foreign banks, inter-bank transactions are both direct and through exchange brokers who receive a small commission for their services. Many banks prefer to pay fees to brokers rather than incur the expense of supporting a full-time, professional trading staff. Functions of Foreign Exchange Market Foreign exchange market serves three main functions. The first is to convert the currency of one country into that of another country as payment, and the second is to provide some insurance against foreign exchange risk, the third is just to make profit by using the foreign exchange market. Functions of Foreign Exchange Market 1. international clearing 2. hedging 3. speculation Functions of Foreign Exchange Market 1. international clearing Companies engaged in international trade and investment are major participants in the foreign exchange market. International businesses have two main uses of foreign exchange market. Functions of Foreign Exchange Market First, the payments a company receives for its export and the income it receives from foreign investments may be in foreign currencies. To use those funds in its home country ,the company must convert them to its home country’s currency. Consider the Scottish distillery that exports its whisky to the U.S. The distillery is paid in dollars, but since those dollars can’t be spent in Great Britain, they must be converted into British pounds. Functions of Foreign Exchange Market Second, international businesses use foreign exchange market