Foreign Exchange Market Summary

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Introduction
Foreign exchange market is an important element in determinant of exchange rate and economic growth, foreign exchange market can be defined as a market which participants are able to buy, sell, exchange and also to speculate on currencies. Foreign exchange markets are a component of banks, commercial companies, central banks, hedge funds, and retail brokers and investors. According to (Yasir Yasin Raja, Mr. Naeem-Ullah, 2014) the foreign exchange market have mentioned as a market for business of foreign currency. Foreign Exchange takes account of foreign currency outline, demand for payment, and, and writings of credit, travellers cheque with the intention of denominated and allocated in foreign currency. In this paper also the writer has mentioned that foreign exchange marketplace reduces or hedge exchange rate jeopardy suitable to unfavourable actions in exchange rates. However, interest rate and inflation has insignificant relationship (Syed Muhammad Atif, 2012) they supply traders to arbitrage chances and in addition make available venture purpose intended for the traders who are organized to depiction in their organizations to currency danger market. …show more content…

Variables like relative interest rate ,term of trade ,trade balance and net capital inflow were tested using regression model ,and panel data regression model which is common effect model ,fixed effect model, and random effect model to determine the variable that effect the Exchange rate

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