Posted by admin on July 2, 2009 under Forex Trading | 
The Forex Transactions of a bank with its customer is known as merchant business and the exchange rate at which the transactions takes place is the merchant rate. The merchant business in which the contract with the customer to buy or sell forex is agreed to and executed on the same day is known as cash transaction or ready transaction. In case of transactions which are carried on interbank a value the following day contract is deliverable on the forthcoming business day next and the spot contract is capable of delivery on the second following business day that follows the contract’s date. Majority of the transactions with clients are on ready made basis. In terms of practice spot and ready are utilized interchangeably for referring to transactions that are executed as well as concluded on an identical day.
There are various locations that govern the regulations related to Features of Forex Market. Forex market is the largest market with daily turnover of more than two trillion United States dollars. They were initially nurtured for facilitation of settlement debts which arise out of international trade. But these markets have staged developments with their own efforts to bring about a situation to the effect that a turnover of three days surpasses the magnitude of world trade in terms of goods and services. The largest forex markets are located in London, New York, Frankfurt, Zurich and Tokyo. The business of forex has been manifesting a steady increase in various countries.
Features of Forex Market talks about twenty-four hours market as when one market closes another market opens its doors. Thus at any point of time a market or another market is open. Therefore, it is stated that forex market has the propensity to function all the twenty-hours a day. Developments in communication have pushed up the efficiency in these markets. All the participants keep themselves abreast with all the developments which are possible with latest rules and regulations.
To conclude, Features of Forex Market involve markets in Brazil’s in Paris, forex business is held at a stationary place such as stock exchange buildings. In all these physical markets the banks normally need in the presence of central banks representative and they resort to a lot of bargains. Such transactions also determine fixed rates for a number of major currencies. Such a practice is termed as fixing. There is a clear cut advantage for such a procedure is known as fixation of exchange rate for commercial transactions. They are determined by markets and are not influenced by any banker. However, there is an observation that large banks attending such meetings with bulk of orders have a tendency to influence the rates.
Posted by admin on under Forex Trading |
The Forex Transactions is a business in which foreign currency is the commodity. Foreign currency cannot be used in other countries than the mother country. The value of United States dollar is the value of any other commodity. Therefore, the foreign currency can be considered as the commodity in Forex Transactions.
Any forex trading has two aspects – purchase and sale. A trader has to purchase goods from his suppliers which he sells to his customers. Likewise, the bank is authorized to deal in forex purchases as well as sells its commodity. Two points need be constantly kept in mind while talking on Forex Transactions.
- The transaction is always talked of from the bank’s point of view, and
- The item referred to is the foreign currency.
Therefore, when we say a purchase, we imply that
- The bank has purchased, and
- It has purchased foreign currency
Similarly, when we say a sale, we imply that
- The bank has sold, and
- It has sold foreign currency.
The quotation for which manifestation of exchange rate is made as the price per unit of foreign currency in terms of the resident currency is termed as home currency quotation or direct quotation. The quotation wherein home currency’s unit is kept constant such a situation is termed as foreign currency quotation where price per unit and exchange rate are denoted in foreign currencies is termed as foreign currency quotation or indirect quotation or currency quotation.
To sum up, Forex Transactions involves all the above elements that may have to be blended in abundant measure for delivery of best results in making appropriate profits.
Posted by admin on July 1, 2009 under Forex Trading |
Forex was considered a rate commodity and was subject to strict control in almost all countries of the world till 1970s. Exchange control was the order of the day. Today we talk of Forex Management and not exchange control. But the fact is that Forex Management from the national point of view is only exchange control or regulation, though in a diluted form.
The term exchange control refers to the control, by the government or a centralized agency of transactions involving forex. In a broad sense, any stipulation or regulations which restrict the free play of forces in the forex market can be termed exercise of exchange control. The rate of exchange under exchange control regime tends to be different from the one that would exist in the absence of such control under Forex Management measures.
The origin of exchange control can be traced to nineteen-thirties. After the First World War, many countries of Europe found themselves with depleted gold reserves and forex. They imposed payment restrictions to prevent massive capital withdrawals and instill stability in the domestic economy. Since then exchange control has been adopted by a large number of countries and for different purposes within the framework of Forex Management measures.
With the onset of globalization and liberalization beginning at the commencement of 1990s, the tendency throughout the world has been that of relaxing exchange control. Even earlier, some countries like United States of America proclaimed that they had no exchange control. But the fact is even today exchange control exists in all countries, with varying intensity.
Thus, the Forex Management act seeks to bring the law on the subject up to date keeping in view the changed environment. This act aims at amending and consolidating the law involving forex for the purposes of facilitating payments and external trade as well as for promoting the orderly development and maintenance of forex markets. The important features noticed in the new act as compared with the previous one are:
- The seriousness of non-compliance with the regulation is diluted. It is only of civil and no criminal consequence.
- The nature of capital account and current account transactions has been clearly defined.
- The new enactment if positive in the sense that all current account transactions not otherwise restricted can be freely carried on.
- The definition of residents as well as non-residents takes into account the duration of their stay in the state, as in the case of federal tax act.
