Question

In: Economics

How important are communications and computing technology to the smooth functioning of the foreign exchange market?...

How important are communications and computing technology to the smooth functioning of the foreign exchange market? If the technological advances of the past four decades were eliminated (for example, no PCs or satellite telecommunications) how would the foreign-exchange market be affected?

Solutions

Expert Solution

Important of communication and computing technology :

Communications and computing technology are more significant to the functioning of foreign exchange market, maximum number of works related to foreign exchange are done one internet, its quick and easy All markets are now over the counter (OTC) system to trade online, earlier there was physical change of currency and papers but now everything is done online.

All the services such as stock exchange, foreign exchange, demat account and transactions such as invest in FDI, share market etc done in real time.

Unparalleled increase in computing power are two aspects that have defined most of the changes that have come in the last few years. Thanks to automation, financial markets have drastically changed especially when it comes to processing trading orders, making investment decisions, reviewing technicalities in legal agreements, and giving scores to mortgage applications.

Impact of technology in Forex:

If the technological advancements of the past four decades were eliminated, the foreign-exchange market would probably not resemble the one we knowtoday.Telecommunications is the vital link in obtaining information about companyperformance, stock prices, and interest rates.It is also important for monitoring changes indifferent capital markets.Computers play a key role in making sense of the information acquired. Without computers, it would be much more difficult to develop the investment and risk reduction strategies.


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