Foreign Exchange Market of Bangladesh

Central banks use two types of transactions: spot transactions (an agreement between two parties to buy or sell currency in exchange for another at the current exchange rate) which are settled within two business day (Spot Transactions, n.d.) and forward transactions which are contracts trading in the over the counter markets (OTC) that lock in the exchange rate of a currency to be bought or sold in the future. An example of forward transaction would be when an American company sells its goods to a Mexican company to be paid in one year and the American company enters into a forward transaction to lock the amount of money to be paid in the future. (Currency Forward Definition,

As the leading financial market in the world, the Foreign Exchange Market consists of several types of financial institutions, such as, investors, such as, central banks, brokers, and investment firms. The Foreign Exchange Market does not have an actual physical location; it is a worldwide system of computers. Currency traders are linked together from all over the world by these computers. Once currency traders enter the network, the computers allow them to exchange currencies by purchasing, selling, or speculating ("Foreign Exchange Markets - Forex - Investopedia Definition | Investopedia," n.d.). In the Foreign Exchange Market, also called Forex Market, trillions of transactions are completed everyday. Within this market are the spot market and forward market. Spot transactions take place in the spot market. A spot transaction occurs when one currency is traded for another currency. These types of transactions are immediate, however it takes two business days for the bank to process this transaction due to different time zones (Standard Bank, n.d.). Forward transactions occur in the forward market and are often called foreign exchange contracts. Unlike spot transactions, forward market transactions are set to occur on a specified future date. The agreement and exchange rate of the transaction is already determined, however, it will be traded at a future date, which is noted in the contract (Standard Bank, n.d.). Many historical

In the similar time period Japanese Yen has been in the third position with a turnover position of 20.8% in the year 2005. The overall financial market currency structure has seen a decline in the turnover position of the US Dollar to 85% from a strong position of 88%. Similarly a decline has been in the position of the Japanese Yen to 17.2% from an acceptable turnover position of 20.8%. While considering the trend of these two currencies during the period starting from 2007 and ending at 2010, it is to be noted that minute changes were seen in the two different currencies with regards to their share in foreign currency market. The US Dollar witnessed a continued fall to 84.9% from its previous 85.6% however, the Japanese Yen saw a rise from its previous position of 17.2% to an increase of1.8% that is 19%. During the same time period the US dollar and Japanese Yen were the second most traded paired currencies and was traded at around 14% of the overall foreign currency market second to the US Dollar and Euro pair. Conclusion The foreign exchange market has seen considerable changes owing to the global financial crisis. It is to be seen how different factors like economy and global politics further impact strong currencies like the US Dollar and other competing currencies such as the Japanese Yen.

In 2008 the central bank licensed certain sellers to set prices in foreign currencies. It was favorable for the sellers because they bought products abroad in foreign currency. This practice was used not only by the sellers with the permission but it was widely adopted.

Look a little from all sides, foreign exchange rates vary. Why is it so? Well profits easily. It is not because of the small people who have a

We are using the third currency pair i.e. GBP/USD for the conduct of the study and the appreciation / Depreciation of these currencies over the

Although there are accountable anomalies, the financial institutions, both nationalized and private, have been serving to assist this sector.

The performance of a stock market is usually associated with the movements in the exchange rate because of its influence on the stock price of a firm. The foreign exchange market is a place where trading of international currencies occurs between many buyers and sellers around the world. Any fluctuations occur in the currency rate can influence the business activities between two different countries. For example, a strong home currency can leads to the firm’s profit when doing business in the country which have a weak currency rate.

If you ever traveled to a foreign country—preferably outside the tourist traps—and spent money, you probably had to exchange your domestic money for local currency. Regardless of where you made such a trade, such as at a currency exchange kiosk when you landed at the airport, the fact that you successfully transacted two, completely distinct currencies related by an exchange rate means that you were, for the briefest of moments, a participant in the nearly $4-trillion-a-day foreign exchange market, or forex. But it is unlikely that such a gargantuan turnover is the appreciable result of money changing by spendthrift globetrotters. Rather, in today’s globalized economy, any institution, from a small export business to a central bank, is liable to have a hand in the currency—and therefore the purchasing power—of a foreign country. While the foreign exchange market may seem like a complicated world of arcane finance, it is not only possible for you to actively participate in it, but there is a highly-developed infrastructure of individual or retail forex trading ready for your attempts to turn a profit from besting the ever-changing exchange rate between currencies. While a professional comprehension of forex trading entails far more practical and conceptual knowledge than this process paper can capture, good preparation and a methodical understanding of the fundamentals of forex practices can help you develop the basic skills to get started in retail forex trading.

As the economy in Thailand began to slow, foreign confidence in it began to falter as well. Just like many other currencies, the value of Thai currency (the Baht) had been pegged to the US dollar in order to ensure stability. At the time, however, the robust US economy was raising the value of the dollar, therefore the value of the baht, causing some foreign investors to believe that it was overvalued. Investors began selling the baht in exchange for the US dollar because the dollar 's value had a more certain future. Speculators jumped on the bandwagon and began selling their supply of baht in record amounts in order to lower its value and realize a profit. In July of 1997, Thailand 's central bank devalued the baht – or unpegged and lowered its value from the dollar in an effort to stop the sudden and massive sell off in order to restore confidence in the currency. When used in non-emergency situations, devaluation of a country 's currency can work to its advantage. When Thailand devalued the baht, it was able to lower the price of Thai goods in US dollar terms, which made making those products more competitive in foreign markets. Devaluation also tends to attract foreign investment in the country. However, this created an emergency situation, and devaluation of the baht only revealed the fundamental weaknesses in the Thai economy and banking system which continued in the domino effect to other Asian countries.

If a country has a fixed exchange rate, the country’s central bank must maintain the given price of the currency with that of the foreign currencies participating. If the central bank is unable to defend the currency during a speculative attack, they may be able to sell the currency in exchange for foreign currencies anticipating that when the bank runs out of reserves it will be forced to stop defending the currency at this price. If a speculator were to calculate correctly, the

If the exchange rate is between these values on the payment date, Two Brother BHD. agrees to accept whatever transaction exposure exists. If, however, the exchange rate falls outside this range on the payment dates, this two company will share the difference equally. For

The Forex Department deal play a very important role in the Banking sector. The customers who are in the foreign countries and whenever they want to send the money to their relatives, the MCB bank help all these types of customers which are in the foreign countries and they have don’t worry about the transaction of money from one country to another one because the Forex Department are doing this type of job and this Department fulfill all the transaction for the foreign customers.

Major players in Forex market include inter-world investment and commercial banks, money portfolio managers, money brokers, large corporations, and retail traders. Earlier, currency movement has been determined by supply and demand force, but now its having a new face such as for risk management purpose

In this, government agrees to buy and sell unlimited amount of the currency at a fixed price. Example: Thai bhat before 1998.