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The Foreign Exchange Market

Introduction

• Exchange rate

• Foreign exchange market

• Why it is important?

Foreign Exchange Transaction

Two types of transactions:-

• Spot transactions

• Forward transaction

Foreign Exchange Quotation

• Direct exchange rates

• Indirect exchange rates

• Cross exchange rates

Exchange rate systems

• Bretton Woods Era (1944-1977)

• Smithsonian Agreement (1971)

• Smithsonian Agreement II (1973)

Participants in Foreign Exchange Market

• Authorized Dealer

• Commercial Banks

• Others

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