Draft travelers cheques, letter or credit or billsof exchange expressed or drawn in Indiancurrency but payable in any foreign currency. Learning How to Increase Learner Engagement. Money and Securities Markets set up by theReserve Bank in 1999 was expanded in 2004to include foreign exchange markets. Successfully reported this slideshow. Exchange RateFixed Exchange Rate SystemFixed rates provide greater certainty forexporters and importers. The higher a countrys interest rates, thegreater will be the demand for that currency. Now customize the name of a clipboard to store your clips.
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Market ParticipantsCentral banks participate in the foreign exchangemarket to align currencies to their mmercial companies. Exchange rate fluctuationsA reliable forecast or future spot rate is calledstudy of empirical patterns of exchange ratefluctuation. Nature of foreign exchangeVolatile, affected by hedger, arbitrager, speculator. Its geographical dispersion; Its continuous operation: 24 hours a day except weekends,.e., trading from 20:15 GMT on Sunday until 22:00 GMT Friday. Affected by the political condition of the can be"d directly or indirectly. Affected by demand and supply. It is the central bank, or professional dealers association, which normally issues the code of conduct (Canales-Kriljenko, 2004).In auction markets, an auctioneer or auction mechanism allocates foreign exchange by matching supply and demand orders. Spot rate of exchange is that rate which happens to prevail at the time when transactions are incurred. Affected by the fiscal policy of the government. Operation of foreign exchange market: Foreign exchange market operates either as:- Spot Market: (Current Market) Spot market for foreign exchange is that market which handles only spot transaction or current transactions. Affected by the economic stability of the country. Thesebanks maintain stocks of one currencies in theform of balances with banks.