" Forein Exchange "

 

 

 

1.   Location: Foreign Exchange market is described as OTC (Over The Counter) market as there is no physical place where the participants meet to execute the deals. It is an informal arrangement among the banks and brokers operating in a financial centre purchasing and selling currencies, connected to each other by tele-communications like telex, telephone, internet, satellite communications, etc. In other foreign exchange market is a system rather than place of dealing in currencies.

 

The leading foreign exchange market in India is Mumbai, Kolkatta, Chennai and Delhi. Cochin, Banglore, Ahmedabad and Goa are new emerging centers.

 

 

2.   Segments: Foreign Exchange dealings are divided into two segments viz,

·         Wholesale segment (referred as foreign exchange market) where the dealings take place among the banks, and

·         Retail Segment where dealing takes place between the banks and their customers. Retail segment is treated as counters of foreign exchange market.

 

 

3.   Size of Market: Foreign exchange market is the largest financial market with a daily turnover of over USD 2 trillion. The turnover of about three days in foreign exchange market is equivalent to the magnitude of world trade in goods and services. The largest foreign exchange market is London, followed by New York, Zurich and Frankfurt.

 

 

The daily turnover of foreign exchange market of India is about USD 2 billion. US dollar (USD), pound-sterling (GBP), Euro (EUR), Japanese Yen (JPY) and Swiss Franc (CHF) being the actively traded currencies in Indian foreign exchange market.

 

 

The code for Indian rupees is INR.

 

 

4.   24 Hours market: The markets are active in different geographical time zones of the globe in such a way that when one market is closing the other is beginning its operations. Thus any point of time one market or the other is open. Therefore it is said that foreign exchange market is a 24 hours market.

 

 

In India, the market is open for the time the banks are open for their regular banking business. No transactions take place on Saturdays and Sundays.

 

 

5.   Physical markets: In few centers like Paris and Brussels, foreign exchange business takes place at a fixed place where the banks meet and in the presence of the representative of the Central Bank and on the basis of bargains fixes rates for a number of major currencies. This practice is called FIXING.