Finance (Ch8).pdf - MoNEY,BANKING I AN'D FINANCIAL from...

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I MoNEY,BANKING AN'D FINANCIAL MARKDTS 2/2007 p,ry (Excelent center) 0r-3s081e4 The Foreign Exchange Market lnarnd'o:ruanr dou; Clasr 1 Foreign Exchange Markets and Rates (narqdfl:rrnnr dgu un; o-nr-r,,onr dou; Foreien Exchange M2fk€t ) Market ir.r rvhich national curencies are exchanged , "flutifrrr'',rrnrirr r r r;-nltrrnnr riotrfiulri r --M- ) The fbreign exchange market is not an urg,auized market with fixecl hours like the Stock Exchange. -tg I no,ut{iluu dnrrn ri r r ror ino.rrirnr:dotrofirnilournn^ou oarnr{u I o-T.c:.. /1.,,e. -+f-. The foreign exchange market is an over-counter market, ' '"'lhe '--- The pri maly commun ication instrumerfr s tfr.=pmffiffi mr.irun or I -- ,iuirqr:,fiuiodrunr:rir; The voh-rme of activity has escalated dramatically in response to thc grorvth in volume of world trade in goods and sen'ices anci especially the expansion in international capital florvs - the acquisition offinancial and real rssels ilcrosi llariunal borders. r r.r,r'r'rr:nr:.rF,uin,rurr'i.urj:",rrn , .=..RF^o,l "..-; l".efg.LpXle4Cg XAIQ rtier: runnrltfi uu ) price at rvhich one national's cLlrrency is cxchanged for another nation's curency 1: rnrro.rGuaqanu'r ill"orta nrirr-l-u 6 naq nn utrr 1 .,$.pqgc.iation ufi rrir - condition in r.vhich;r unit of a nation's Depreciation dourir - condition is which a unit of a nation's cutrenc.v huy-s more units of other nations'cunency : .troflt"ln0! lnutnl]u depreciation, oourjr appreciation. u{.srit ij'; v HdnnlS ^_^^ currenc)/ buys felver units of other nations'currency. 'L+'^"';; ' ryofllto01t t91l0ta.i trylJtflltu tTu0ut 1 tFlllrltJA 1 tfr ll.t n 1u '//'. appreclatlon. depreciation. ,',iu' !), ll" ,/y'$ Downloaded from ABACTODAY.COM
S F ixed Exchange Rate (o'qr,-ruurn'rfi ) - Before the 1970s , fi1-9I4C its exchange rate,at a predetermined level \-'- nld'n:ltlantrlfilu - Each nation was required to maintain the exchange rate at a specific level unles.s and until the nation demonstrated to the lnte.nagonai Monetary nunJgM4 ttrat ihe exchange rate level was inappropriate and unsustainable.

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