国际金融英文版CH3.pptxVIP

Chapter 3;Foreign Exchange Market; 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. The foreign exchange market is by far the largest financial market in the world. Foreign exchange market has two functions: the first is to convert one currency into another (the spot exchange market); the second is to provide insurance against foreign exchange risk (the forward exchange market).; 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; 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 $1.9 trillion. The U.S. 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 34.1% of daily world exchange. New York is about 16%. ;Global foreign exchange market turnover, 1998 -2010 (daily averages in April, billions of U.S. dollar);Top 10 geographic trading center in the foreign exchange market, 1992-2007 (daily averages in April, billions of $);Foreign exchange market structure;Participants in the foreign exchange market; Dealers often function as market makers who stands ready to buy and sell at quoted exchange rates, earning their profit by the difference of the bid and ask price. Small- to medium-size banks are not market makers in the interbank market. They buy from and s