Question

What is the Forex or FX market, how is that market organized (e.g. exchange etc.), who are the major participants, when and where does it operate, how is it managed, and in what major cities is it located and what regions do these hubs control? What is the trading volume of this market, and how is trading conducted?

Answer 1

Forign currency market is largely traded over the counter in a decentralised network. In forex market, traders buy and sell currencies and sets the exchange rates for the currencies. It works through financial institutions. It has a high trading volume.

Exchange rate is the relative price of the two currencies.

Hence we can say that it a market where currencies are bought and sold at a determined exchange rate, where the players are connected via telephone, internet and satellite communication network.

The foriegn market exchange in India are Delhi, Mumbai, Chennai, kolkata and other centers as well.

It is place where foreign exchange takes place.

The primary function is the transfer of purchasing power from one currency to another; credit facilities for exporters and importers; covering of risk arising from fluct6 in exchange rates via hedging;

Products that are associated with forex market are spot market, forward market, future, options, swaps.

Participants are:

1. Hedge funds.

2. Banks - commercial banks and central banks

3. Investment companies.

4. Commercial firms

5. Brokers

6. Investors

7. Corporates

8. Speculators

9. Hedgers

Forex market determines the foreign exchange rate. It is the largest market in the world in terms of trading volume.