Presentation on

Foreign exchange market

OF
Master of Business Administration
BY
Kavya.L

S.E.A college of Engineering and Technology

FOREIGN EXCHANGE
MARKET
 What is forex market….???
The foreign exchange market (Forex, FX, or
currency market) is a global decentralized or
over-the-counter (OTC) market for the trading of
currencies.

Participants include banks, corporations, central

banks, investment management firms, hedge
funds, retail forex brokers and investors.
This market determines the foreign exchange rate

 It includes all aspects of buying, selling and

exchanging currencies at current or determined
prices.

 In terms of trading volume, it is by far the largest

market in the world, followed by the Credit market

The foreign exchange market works through

financial institutions and operates on several levels
It is the largest, most liquefied market in the
world with an average traded value that exceeds
dollar 5.1 trillion per day.
Understanding forex market

The foreign exchange market determine the

relative value of different curriences.

There are huge speculative returns that can

made by predicting the value of international
curriences.
We shall understand the forex market by
an example

Compnies buy goods from

other countries in order to
buy them they need
to obtain the local currency first. just like one
going to holiday.the difference is they will
exchange huge amounts .when these companies
exchange huge amounts it actually moves the
price,
Because the demand for the currency they need is
increases when the demand increases the price
increases,well all these exchanging going in the
world the exchange rates constantly moves.this is
how the forex market works.

As in money market the price is determined by

the law of supply and demand.
How to trade in forex market?

 If there are many companies want to change €

into dollar then the price of the US dollar rises
against the Euro and also exchange rate will change

You can trade curriences through online exchange

offices(broker)

You can trade from your home or from anywere all

you need is internet connection.
You need not get huge money to get started
150dollar is enough for trading and building your
account in forex market
Who are the major traders in forex
market ?
Commercial companies
Central banks
Foreign exchange fixing
Speculators
Investment management firms
Retail investors
 The Indian Forex market

Foreign exchange market in India works under

the central government of India.

The Indian exchange market is made up of the

byuers, sellers, market mediators and the monitory
authority of India

The foreign exchange management act ,1991 or

FEMA regulates the whole foreign exchange
market.
The foreign exchange market in India is growing
very rapidly and the annual turnover of the market
is more than US dollar 400 billion.

 Forex trading is not completely illegal in India,

but it is restricted to certain currencies, which are
paired against the INR as well as some of the 'cross
currencies'. In India, you can trade within the
brackets of USD-INR, YEN- INR, GBP- INR and
EUR-INR pairs. In cross currencies, you can trade
within EUR-USD, GBP-USD, and the USD- JPY
pairs.
You are allowed to trade only through brokers
who are registered with the authorized exchanges
such as NSE, MCX-SX, and/or the BSE. If you
trade in pairs other than those allowed by the RBI,
then it is considered illegal under the FEMA act.

The main reason behind restrictions in Forex

trading is to ensure that the loss by a trader does
not result in the outflow of foreign exchange
which may lead to pressure on the domestic
currency, therefore increasing the current account
deficit.
The foreign exchange market is unique because
of the following characteristics:

It’s huge trading volume, representing the largest

asset class in the world leading to high liquidity.

its geographical dispersion

its continuous operation: 24 hours a day except

for weekends, i.e., trading from 22:00 GMTon
Sunday (Sydney) until 22:00 GMT Friday (New
York)
The low margins of relative profit compared with
other markets of fixed income.

The use of leverage to enhance profit and loss

margins and with respect to account size.
 Conclusion
The basis of FOREX are very easy to
understand.However ,actual currency trading can be
relatively tricky.

To analyse the foreign exchange market you must

be acquainted with the interplay of various factors
affecting the trade
There are no specific trading styles that will offer
an unblocked path to profits and success.a smart
trader will always pick a method he feels
comfortable with.although , it is important to
adhere to the basic principles combining it
knowledge of the market and experience for a
successful career in the FOREX market.