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Forex Mgt.

The document discusses foreign exchange markets. It describes the foreign exchange market as where currencies are bought and sold against each other. It then explains the spot market involves transactions for currencies delivered within two days, while the forward market involves contracting today for future currency exchange at specified dates, with the rates for future delivery called forward exchange rates.

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173 views10 pages

Forex Mgt.

The document discusses foreign exchange markets. It describes the foreign exchange market as where currencies are bought and sold against each other. It then explains the spot market involves transactions for currencies delivered within two days, while the forward market involves contracting today for future currency exchange at specified dates, with the rates for future delivery called forward exchange rates.

Uploaded by

Aditya
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Foreign

Exchange
Management
Foreign Exchange Market

 The foreign exchange market is


the market in which currencies
are bought and sold against
each other.

 The market where one currency


is traded for another is called
foreign exchange market.
Foreign Exchange Market

 Spot Market

 Forward Market
Spot Market

Spot market is the market where


the transactions are conducted
for the spot delivery of
currencies.

Spot delivery means the delivery


after two days the spot contract
is close.
Exchange Rate

 The rate at which one currency


is traded for another is called
exchange rate
The exchange rate for
immediate delivery is called
spot exchange rate and is
denoted by S(.)

where S(.) is the relationship


between two currencies
Example

S(Rs./$) = Rs.36.10/$

Is the relationship between rupees


and dollars, which says that one
dollar is equivalent to Rs.36.10
Forward Market

The forward market involves


contracting today for the future
purchase or sale of foreign
exchange.
Forward Exchange Rate

The exchange rates for delivery


and payment at specified future
dates are called forward
exchange rates and is denoted
by F(.)

F(.) specifies a relationship


between domestic and foreign
currency.

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