You are required to forecast the expected change in the exports to the USA from China and Japan. The spot rate is 200 Japanese yen per yuan. The spot rate 6-months before was 180 Japanese yen per Yuan. The value of Chinese yuan is tied with the US$ and it will be. a. From China remain same, from Japan will increase. b. From China will increase, from Japan will remain same. c. From China remain same, from Japan will decrease. d. From China will decrease, from Japan will remain same. Answer Subnit

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Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.