A STUDY OF CUTOMERS PREFRENCE FOR CURRENCY

MARKET
SUBMITTED IN FULFILLMENT FOR THE AWARD OF THE
DEGREEOF
MASTERS OF BUSINESS ADMINISTRATION
2015-17

UNDER THE GUIDANCE OF:

SUBMITTED BY:

Mrs. Riya Sharma

Akash Rathi

Associate Professor

MBA 3rd Semester

Enrollment No.01114803915

MAHARAJA AGRASEN INSTITUTE OF TECHNOLOGY

Affiliated to Guru Gobind Singh Indraprastha University
PSP Area, Plot No. 1, Sector 22, Rohini 110086

STUDENT DECLARATION
This is to certify that I have completed this Project titled A STUDY OF
CUSTOMER PREFRENCES FOR CURRENCY MARKET under the guidance of
Mrs.Riya Sharma in partial fulfillment of the requirement for the award of degree of
Master Of Business Administration at Maharaja Agrasen Institute Of Technology,
Affiliated to Guru Gobind Singh Indraprastha University PSP Area, Plot No. 1, Sector
22, Rohini delhi-110086. This is an original piece of work and I have not submitted it
earlier elsewhere.

Date:
Place:DELHI

Signature:
Name-Akash Rathi
Roll No-01114803915

CERTIFICATION FROM GUIDE

This is to certify that summer project titled A STUDY OF CUSTOMER
PREFRENCES FOR CURRENCY MARKET is an academic work done by AKASH
RATHI submitted in the partial fulfillment of the requirement for the award of the
degree of Master of Business Administration at MAHARAJA AGRASEN
INSTITUTE OF TECHNOLOGY, DELHI under my guidance and direction.
To the best of my knowledge and belief the data and information presented by him in
the Project has not been submitted earlier.

Signature:
Mrs. Riya Sharma

Acknowledgment

I am thankful to Mr. Dharmender Dahiya (Director) and the management of Weizard

Forex Pvt. limited for permitting me to go through my summer training.

First and for most I would like to thank my company guide Mr. Ajay Punia ( Sales
Manager) for his constant encouragement, guidance and advice at every stage of my
training. This project would not have been successfully completed without their great
support.

I am very much thankful to Maharaja Agrasen Institute of Technology for their

excellent guidance, support and appreciation and also provided me with this great
opportunity to work in such a reputed organization.

I express my sincere thanks to Mr. M.K.Bhatt (Director), Mr. Gaurav Aggarwal (class
coordinator), Mrs.Riya Sharma (Mentor) who helped me in understanding the project
and the implementation of the same. Her suggestions really helped me think on a
broad perspective and give me motivation to do my best. I would again like to thank
Maharaja Agrasen Institute Of Technology, New Delhi for helping and supporting me
for my Summer Internship Program at WEIZARD FOREX PVT. LTD.

Date:
Place: -

Akash Rathi

EXECUTIVE SUMMARY
Freign Exchange is the business of currency exhange."property Also: the business of
real foreign exchange; the profession of buying, selling, currency.
Marketing are activities of a company associated with buying and selling a product or
service. It includes advertising, selling and delivering products to people. Marketing is
very important in the field of foreign exchange. Foreign exchange offers sevices that
are not costly and can be sold only easily. Client will think and invest carefully as
foreign exchange involves risk. Marketing is the only way which can leads to sales in
this field. Client will get to know about the services only through the means of
marketing.
This study includes the effective ways of marketing in currency market and will
define the ways which are more effective in sales of currency. It involves the
strategies for the selling of the currencies and how it could attract the customers. This
study includes a questionnaire filled by the respondents to know the preferences and
choices of the customer which can further assist in strategy formation for the
company.
The study is limited to Weizard Forex Pvt.Ltd.. It was carried out for a short time
period and due to paucity of time an in-depth study was not possible.

Table of Content

Chapter

Particulars

Page No.

Chapter 1

Introduction

Objective and limitation of study

Company Profile

4.1 Who we are

4.2 Services

4.3 Board of Directors

Literature Review

Research Methodology

3.1 Research Design

3.2 Define the target population

3.3 The Six W

10

Foreign Exchange market

11

Chapter 2

Chapter 4

1.Foreign Exchange market in 12

India

Chapter 4

Chapter 5

1.1 Market size and liquidity

14

1.2 Market Participants

16

1.3.Determinant of FX rate

20

Questionnaire

24

1. Demographic Questions

25

2. Main Questions

30

Conclusion

38

Annexure

40

Recommendation

42

Bibliography

43

CHAPTER-1

INTRODUCTION

1. Introduction
The foreign exchange market or Currency market is a global, worldwide decentralized
over-the-counter financial market for trading currencies. Financial centers around the
world function as anchors of trading between a wide range of different types of buyers
and sellers around the clock, with the exception of weekends.

The foreign exchange market determines the relative values of different currencies.
The primary purpose of the foreign exchange is to assist international trade and
investment, by allowing businesses to convert one currency to another currency. For
example, it permits a US business to import British goods and pay Pound Sterling,
even though the business's income is in US dollars.

It also supports direct speculation in the value of currencies, and the carry trade,
speculation on the change in interest rates in two currencies. In a typical foreign
exchange transaction, aparty purchases a quantity of one currency by paying a
quantity of another currency.

The modern foreign exchange market began forming during the 1970s after three
decades of government restrictions on foreign exchange transactions (the Bretton
Woods system of monetary management established the rules for commercial and
financial relations among the worlds major industrial states after World War II), when
countries gradually switched to floating exchange rates from the previous exchange
rate regime, which remained fixed as per the Bretton Woods system.

2. Objective of the study

Primary Objective:

To Study Impact of Currency market in Indian economy.

Secondary Objective:

To study the on board aspects of corporate.

To Study the various services provided by Broker house to their clients.
To know investors experience in Forex market,
To study what other services investors expect from their broker house.

3.Limitations of the study

Theoretical data are taken from internet; possibilities of wrong data can take in the
report.
Respondent could provide wrong data.
Shortage of time.
May small sample size doesnt cover the all population characteristics.

4.Company Profile

Company Name:- Weizard Forex Pvt. Ltd.

Address:- G-4,Mezz,F.1.,Deepak Building,Nehru Place,New Delhi-110019
Website:- www.weizardforex.com

4.1.Who we are
Weizard Forex is one stop shop for all your foreign currency, travelers cheque,
prepaid travel card, inward money transfer, hotel booking, Air Ticketing & travel
insurance.
Weizard Forex Pvt. Ltd. created in the year 2007, are the pioneers of the
Foreign Exchange business in INDIA. Determined by clients need and
business sector request, with non attendance of any banks or budgetary
organization.

Weizard Forex Pvt. Ltd. is the planet's heading outside trade expert. Our
extensive learning and smoothness in remote trade, and our planet class
client administration offers travellers a winning mixture
.
With Weizard Forex Pvt. Ltd. you can reserve foreign currency online at
extremely focused trade rates and pay NO COMMISSIONS; you can
additionally gather in store, making our money trade benefits fast, helpful,
and esteem for cash.

4.2 Services

Weizard Forex is one stop shop for all your foreign currency, travelers cheque,
prepaid travel card, inward money transfer,hotel booking, Air Ticketing & travel
insurance.

Foreign Currency

Travellers Cheque

Prepaid Traveller Card

Western Union

Money Gram

Hotel Booking

Air Ticket Booking

Insurance

4.3 Board of Directors

1. Dharmender Dahiya
2. Inderpal Singh
3. Sarita Dahiya
4. Veermati Devi

CHAPTER 2
LITERATURE REVIEW

1. Research Methodology
1.1 Research design

A research design is a framework or blue print for conducting the marketing research
project. It specifies the details of the procedures necessary for obtaining the
information needed to structure and solve market research problem.

RESEARCH DESIGN:-

1. Exploratory research

2. conclusive research

1.Exploratory Design:-

In exploratory design first collect the information about research.

Understand foreign exchange market

Collection of primary data from past research.

Then collection secondary data from Books, Magazines, Internet etc.

Then start qualitative research in this the interview of branch

manager & relationship manager of Weizard Forex Pvt.Ltd.

2.Conclusive research design:

In conclusive research main part is survey.

In this research design we get perfect conclusion.

It is structure.

In conclusive research design two types.

a.Causal research
b.Descriptive research

In this research use Descriptive research

Descriptive research two types

i . C r o s s

s e c t i o n a l

i i . L o n g i t u d i n a l

d e s i g n

In cross sectional

In cross sectional use Single cross sectional design because in our research
theinformation collects only ones a time.
In longitudinal design use panel.

Research design

:- 1. Exploratory research

2. Conclusive research

1 . E x p l o r a t o r y res e a rch : - a . S e c o n d a r y res e rch

b. Qualitative research

I.Focus

group

II.In-depth

interview

interview

2 . C o n c l u s i v e res e a rch > D e s c r i p t i v e res e a rch .

Descriptive research
Cross-sectional

> I. cross sectional

> signal cross-sectional

2. Define the target population

1.Target population:
The collection of elements or objects that process the informationsought by the
researcher and about which inferences are to be made.

2.Elements:
An object that possesses the information sought by the researcher.

3.Sampling unit:
The basic unit containing the elements of the population to be sampled.

4.Sampling frame:
A representation of the elements of the target population.It consists of a list or set of
direction for identifying the target population.

5.Extent:
Extent refers to the geographical boundaries.

6.Time:
Time is time period under consideration.

Target population: All the account holders of Weizard Forex Pvt. Ltd., who
trade in currency.

Elements: Investors of currency market.

Sampling unit: Investors of currency market

Sampling frame: Not available.

Extent: Delhi

Time: 11.00 A.M to 5.00 P.M

3. The six W

1. Who:
who are respondent?The accounts holder in Weizard Forex who are trading in Forex
Market

2. What:
what information should be obtained from the respondent?A wide variety of
information could be obtained, including:

a.What are income criteria?

b.In which financial instrument they investing?
c.Factors they determine before investing.

3. When:
when should the information is obtained from the respondent?
11.00a.m. to 5.00p.m.

4. Where:
where should the respondent is contacted to obtain the required information?The
information was collected from the Weizard Forex, Nehru Place,Delhi.

5. Why:
why are we obtaining information from the respondent?
It is the necessary step to determine the factors of currency market impact 0n
customers preference because of the research project assigned.

6. Way:
In what way are we going to obtain information from the respondent?

a.Personal interview with questioners

b.Expert opinion

10

Chapter-3

Foreign exchange market

11

1. Foreign Exchange Markets in India

Historically the value of goods was expressed through some other goods, for example
- a barter economy where individuals exchange goods. The obvious disadvantages of
such a system encouraged establishment of more generally accepted and understand
means of goods exchange long time ago in history - to set a common scale of value. In
different places everything from teeth to jewelry has served this purpose but later
metals, and especially gold and silver, were introduced as an accepted means of
payment, and also a reliable form of value storage.

Originally, coins were basically minted from the metal, but stable political systems
introduced a paper form of IOUs (I owe you) which gained wide acceptance during
the middle Ages. Such paper IOUs became the basis of our modern currencies.

Before First World War most central banks supported currencies with gold. Even
though banknotes always could be exchanged for gold, in reality this did not happen
that often,developing an understanding that full reserves are not really needed.

Sometimes huge supply of banknotes without gold support led to giant inflation and
hence political instability. To protect national interests foreign exchange controls were
introduced to demand more responsibility from market players.

Closer to the end of World War II, the Bretton Woods agreement was signed as the
initiativeof the USA in July 1944. The Bretton Woods Conference rejected John
Maynard Keynes suggestion for a new world reserve currency in favor of a system
built on the US dollar.Other international institutions such as the IMF, the World Bank
and GATT (General Agreement on Tariffs and Trade) were created in the same period
as the emerging victors ofWW2 searched for a way to avoid the destabilizing
monetary crises which led to the war. The Bretton Woods agreement resulted in a
system of fixed exchange rates that partly reinstated the gold standard, fixing the US
dollar at USD 35/oz and fixing the other main currencies to the dollar - and was
intended to be permanent.

The Bretton Woods system came under increasing pressure as national economies
moved indifferent directions during the sixties. A number of realignments kept the
system alive for along time, but eventually Bretton
Woods collapsed in the early seventies following president Nixon's suspension of the
gold convertibility in August 1971. The dollar was no longer suitable as the sole
international currency at a time when it was under severe pressure from increasing US
budget and trade deficits.

12

The following decades have seen foreign exchange trading develop into the largest
global market by far. Restrictions on capital flows have been removed in most
countries, leaving the market forces free to adjust foreign exchange rates according to
their perceived values.

But the idea of fixed exchange rates has by no means died. The EEC (European
Economic Community) introduced a new system of fixed exchange rates in 1979, the
European Monetary System. This attempt to fix exchange rates met with near
extinction in 1992-93,when pent-up economic pressures forced devaluations of a
number of weak European currencies. Nevertheless, the quest for currency stability
has continued in Europe with there newed attempt to not only fix currencies but
actually replace many of them with the Euro in2001.

The lack of sustainability in fixed foreign exchange rates gained new relevance with
the events in South East Asia in the latter part of 1997, where currency after currency
was devalued against the US dollar, leaving other fixed exchange rates, in particular
in South America, looking very vulnerable.

But while commercial companies have had to face a much more volatile currency
environment in recent years, investors and financial institutions have found a new
playground. The size of foreign exchange markets now dwarfs any other investment
market by a large factor. It is estimated that more than USD 3,000 billion is traded
every day, far more than the world's stock and bond markets combined.

Forex (Foreign Exchange) is the international financial market used for trade of world
currencies. It has been working since 70s of the 20th century - from the moment when
the biggest world nations decided to switch from fixed exchange rates to floating
ones. Daily volume of Forex trade exceeds 4 trillion United States dollars, and this
number is always growing .Main currency for Forex operations is the United States
dollar (USD).

Unlike stock exchanges, Forex market doesn't have any fixed schedule or operating
hours -it's open 24 hours per day, 5 days per week from Monday to Friday, since
buy/sell orders are performed by world banks any time during the day or night (some
banks even work on Saturdays and Sundays). Just like any other exchange, Forex
market is driven by supply and demand of a particular tool. For instance, there are
buyers and sellers for "Euro vs US dollar".

Exchange rates at Forex are changing constantly, and fluctuations may happen many
times per second - this market is very liquid.

13

1.1. Market Size and liquidity

The foreign exchange market is the most liquid financial market in the world. Traders
include large banks, central banks, institutional investors, currency speculators,
corporations,governments, other financial institutions, and retail investors. The
average daily turnover in the global foreign exchange and related markets is
continuously growing. According to the2010 Triennial Central Bank Survey,
coordinated by the Bank for International Settlements,average daily turnover was
US$3.98 trillion in April 2010 (vs $1.7 trillion in 1998). Of this$3.98 trillion, $1.5
trillion was spot foreign exchange transactions and $2.5 trillion was traded in outright
forwards, FX swaps and other currency derivatives.

Trading in the UK accounted for 36.7% of the total, making UK by far the most
important global center for foreign exchange trading. In second and third places,
respectively, trading in the USA accounted for 17.9%, and Japan accounted for 6.2%.

Turnover of exchange-traded foreign exchange futures and options have grown

rapidly in recent years, reaching $166 billion in 2015 (double the turnover recorded in
April 2007).Exchange-traded currency derivatives represent 4% of OTC foreign
exchange turnover. FX futures contracts were introduced in 1972 at the Chicago
Mercantile Exchange and are actively traded relative to most other futures contracts.

Most developed countries permit the trading of FX derivative products (like currency
futures and options on currency futures) on their exchanges. All these developed
countries already have fully convertible capital accounts. A number of emerging
countries do not permit FX derivative products on their exchanges in view of controls
on the capital accounts. The use of foreign exchange derivatives is growing in many
emerging economies. Countries such as Korea, South Africa, and India have
established currency futures exchanges, despite having some controls on the capital
account.

Foreign exchange trading increased by 20% between 2012 and 2015 and has more
than doubled since 2004. The increase in turnover is due to a number of factors: the
growing importance of foreign exchange as an asset class, the increased trading
activity of high-frequency traders, and the emergence of retail investors as an
important market segment. The growth of electronic execution methods and the
diverse selection ofexecution venues have lowered transaction costs, increased market
liquidity, and attracted greater participation from many customer types. In particular,
electronic trading via online portals has made it easier for retail traders to trade in the
foreign exchange market. By 2015, retail trading is estimated to account for up to
10% of spot FX turnover, or $150 billion per day.

14

Top 10 currency traders % of overall volume, May 2015

Rank

Name

Market share

Deutsche Bank

15.64 %

Barclays Capital

10.75 %

UBS AG

10.59 %

Citi

8.88 %

JP morgan

6.43 %

HSBC

6.26 %

Royal Bank Of Scotland

6.20 %

Credit Suisse

4.80 %

Goldman Sachs

4.33 %

10

Morgan Stanley

3.64 %

Because foreign exchange is an OTC (over the counter) market where brokers/dealers
negotiate directly with one another, there is no central exchange or dearing house. The
biggest geographic trade center is UK,primarily London,which according to the city
UK estimates has increased it share of global turnover in traditional transaction from
34.6% in April 2012 to 36.7% in April 2015. Due to Londons dominance in the

market,a particular currencys quoted price is usually the London market price . For
instance, when the IMF calculates the value of its SDRs every day, they use the
London market prices at noon that day.
15

1.2. Market participants

Unlike a stock market, the foreign exchange market is divided into levels of access. At
the top is the inter-bank market, which is made up of the largest commercial banks
and securities dealers. Within the inter-bank market, spreads, which are the difference
between the bid and ask prices, are razor sharp and not known to players outside the
inner circle. The difference between the bid and ask prices widens (for example from
0-1 pip to 1-2 pips for a currencies such as the EUR) as you go down the levels of
access. This is due to volume. If a trader can guarantee large numbers of transactions
for large amounts, they can demand a smaller difference between the bid and ask
price, which is referred to as a better spread. The levels of access that make up the
foreign exchange market are determined by the size of the "line" (the amount of
money with which they are trading). The top-tier inter bank market accounts for53%
of all transactions. From there, smaller banks, followed by large multi-national
corporations (which need to hedge risk and pay employees in different countries),
large hedge funds, and even some of the retail FX market makers. According to Galati
and Melvin,Pension funds, insurance companies, mutual funds, and other
institutional investors have played an increasingly important role in financial markets
in general, and in FX markets in particular, since the early 2000s. (2004) In addition,
he notes, Hedge funds have grown markedly over the 20012004 period in terms of
both number and overall size. Central banks also participate in the foreign exchange
market to align currencies to their economic needs.

a . B a n k s

The inter bank market caters for both the majority of commercial turnover and large
amounts of speculative trading every day. Many large banks may trade billions of
dollars, daily. Some of this trading is undertaken on behalf of customers, but much is
conducted by proprietary desks, which are trading desks for the bank's own account.
Until recently, foreign exchange brokers did large amounts of business, facilitating

inter bank trading and matching anonymous counterparts for large fees. Today,
however, much of this business has moved on to more efficient electronic systems.
The broker squawk box lets traders listen in on ongoing inter bank trading and is
heard in most trading rooms, but turnover is noticeably smaller than just a few years
ago.

b.Commercial companies

An important part of this market comes from the financial activities of companies
seeking foreign exchange to pay for goods or services. Commercial companies often
16
trade fairly small amounts compared to those of banks or speculators, and their trades
often have little short term impact on market rates. Nevertheless, trade flows are an
important factor in the long-term direction of a currency's exchange rate. Some
multinational companies can have a nun predictable impact when very large positions
are covered due to exposures that are not widely known by other market participants.

c.Central banks

National central banks play an important role in the foreign exchange markets. They
try to control the money supply, inflation, and/or interest rates and often have official
or un official target rates for their currencies. They can use their often substantial
foreign exchange reserves to stabilize the market. Nevertheless, the effectiveness of
central bank "stabilizing speculation" is doubtful because central banks do not go
bankrupt if they make large losses,like other traders would, and there is no convincing
evidence that they do make a profit trading.

d.Forex Fixing

Forex fixing is the daily monetary exchange rate fixed by the national bank of each
country.The idea is that central banks use the fixing time and exchange rate to
evaluate behavior of their currency. Fixing exchange rates reflects the real value of
equilibrium in the forex market. Banks, dealers and online foreign exchange traders
use fixing rates as a trend indicator.The mere expectation or rumor of central bank
intervention might be enough to stabilize a currency, but aggressive intervention
might be used several times each year in countries with a dirty float currency regime.
Central banks do not always achieve their objectives. The combined resources of the
market can easily overwhelm any central bank. Several scenarios of this nature were
seen in the 199293 ERM collapse, and in more recent times in Southeast Asia.

e.Hedge funds as speculators

About 70% to 90% of the foreign exchange transactions are speculative. In other
words, the person or institution that bought or sold the currency has no plan to
actually take delivery of the currency in the end; rather, they were solely speculating
on the movement of that particular currency. Hedge funds have gained a reputation for
aggressive currency speculation since 1996. They control billions of dollars of equity
and may borrow billions more, and thus may overwhelm intervention by central banks
to support almost any currency,if the economic fundamentals are in the hedge funds'
favor.

17

f.Investment management firms

Investment management firms (who typically manage large accounts on behalf of

customers such as pension funds and endowments) use the foreign exchange market
to facilitate transactions in foreign securities. For example, an investment manager
bearing an international equity portfolio needs to purchase and sell several pairs of
foreign currencies to pay for foreign securities purchases. Some investment

management firms also have more speculative specialist currency overlay operations,
which manage clients' currency exposures with the aim of generating profits as well
as limiting risk. Whilst the number of this type of specialist firms is quite small, many
have a large value of Assets Under Management (AUM),and hence can generate large
trades.

g.Retail foreign exchange traders

Individual Retail speculative traders constitute a growing segment of this market with
the advent of retail forex platforms, both in size and importance. Currently, they
participate indirectly through brokers or banks. Retail brokers, while largely
controlled and regulated in the USA by the CFTC and NFA have in the past been
subjected to periodic foreign exchange scams. To deal with the issue, the NFA and
CFTC began (as of 2009) imposing stricter requirements, particularly in relation to
the amount of Net Capitalization required of its members. As a result many of the
smaller and perhaps questionable brokers are now gone or have moved to countries
outside the US. A number of the forex brokers operate from the UK under FSA
regulations where forex trading using margin is part of the wider over-the-counter
derivatives trading industry that includes CFDs and financial spread betting.

There are two main types of retail FX brokers offering the opportunity for speculative
currency trading:brokers and dealers or market makers.Brokers
serve as an agent of the customer in the broader FX market, by seeking the best price
in the market for a retail order and dealing on behalf of the retail customer. They
charge a commission or mark-up in addition to the price obtained in the
market.Dealers or market makers, by contrast, typically act as principal in the
transaction versus the retail customer, and quote a price they are willing to deal at.

h . N o n - b a n k f o rei g n e x c h a n g e c o mp a n i e s

Non-bank foreign exchange companies offer currency exchange and international

payments to private individuals and companies. These are also known as foreign
exchange brokers but are distinct in that they do not offer speculative trading but

rather currency exchange with payments (i.e., there is usually a physical delivery of
currency to a bank account).It is estimated that in the UK, 14% of currency
18
transfers/payments are made via Foreign Exchange Companies. These companies'
selling point is usually that they will offer better exchange rates or cheaper payments
than the customer's bank. These companies differ from Money Transfer/Remittance
Companies in that they generally offer higher-value services.

i . M o n e y t r an s f e r / remi t t a n c e c o mp a n i e s a nd b u rea u d e
changes

Money transfer companies/remittance companies perform high-volume low-value

transfers generally by economic migrants back to their home country. In 2007, the
Aite Group estimated that there were $369 billion of remittances (an increase of 8%
on the previous year). The four largest markets (India, China, Mexico and the
Philippines) receive $95billion. The largest and best known provider is Western Union
with 345,000 agents globally followed by UAE Exchange

Bureau de change or currency transfer companies provide law value foreign

exchange service for travelers. These are typically located at airports and stations or
tourist locations ans allow physical notes to be exchanged from one currency to
another. They access the foreign exchange markets via banks or non bank foreign
exchange companies.

Most traded currency (May 2015)

Rank

Currency

% daily share

USD

84.9%

EUR

39.1%

JPY

19.0%

GBP

12.9%

AUD

7.6%

CHF

6.4%

CAD

5.3%

HKD

2.4%

SEK

2.2%

10

NZD

1.6%

11

KRW

1.5%

12

SGD

1.4%

13

NOK

1.3%

14

MXN

1.3%

15

INR

0.9%

16

Other currencies

12.2%

TOTAL

200%

1.3 Determinants of FX rates

The following theories explain the fluctuations in FX rates in a floating exchange rate
regime(In a fixed exchange rate regime, FX rates are decided by its government):
I. International parity conditions: Relative Purchasing Power
P a r i t y, i n t e r e s t r a t e p a r i t y, Domestic Fisher effect, International Fisher effect.
Though to some extent the above theories provide logical explanation for the
fluctuations in exchange rates, yet these theories falter as they are based on challenge
able assumptions [e.g., free flow of goods, services and capital] which seldom hold
true in the real world.

I I . B a l a n c e o f p a y m e n t s m o d e l : T h i s m o d e l , h o w e v e r, f o c u s e s
l a r g e l y o n t r a d a b l e g o o d s and services, ignoring the increasing role of global
capital flows. It failed to provide any explanation for continuous appreciation of
dollar during 1980s and most part of 1990s in face of soaring US current account
deficit.

I I I . As s e t m a r k e t m o d e l : v i e w s c u r r e n c i e s a s a n i m p o r t a n t
a s s e t c l a s s f o r c o n s t r u c t i n g investment portfolios. Assets prices are
influenced mostly by peoples willingness to hold the existing quantities of assets,
which in turn depends on their expectations on the future worth of these assets. The

asset market model of exchange rate determination states that the exchange rate
between two currencies represents the price that just balances the relative supplies of,
and demand for, assets denominated in those currencies.

None of the models developed so far succeed to explain FX rates levels and volatility
in the longer time frames. For shorter time frames (less than a few days) algorithms
can be devised to predict prices. It is understood from the above models that many
macroeconomic factors affect the exchange rates and in the end currency prices are a
20
result of dual forces of demand and supply. The world's currency markets can be
viewed as a huge melting pot: in a large and ever-changing mix of current events,
supply and demand factors are constantly shifting, and the price of one currency in
relation to another shifts accordingly. No other market encompasses (and distills) as
much of what is going on in the world at any given time as foreign exchange.

Supply and demand for any given currency, and thus its value, are not influenced by
any single element, but rather by several. These elements generally fall into three
categories:economic factors, political conditions and market psychology.

a.Economic factors

These include: (a) economic policy, disseminated by government agencies and

centralbanks,(b)economicconditions,generally revealed through economic reports, and
other economic indicators.

Economic policy comprises government fiscal policy (budget/spending practices)

and monetary policy (the means by which a government's central bank influences the
supply and "cost" of money, which is reflected by the level of interest rates).

Government budget deficits or surpluses: The market usually reacts negatively to

widening government budget deficits, and positively to narrowing budget deficits.The
impact is reflected in the value of a country's currency.

Balance of trade levels and trends: The trade flow between countries illustrates the
demand for goods and services, which in turn indicates demand for a country's
currency to conduct trade. Surpluses and deficits in trade of goods and services reflect
the competitiveness of a nation's economy. For example, trade deficits may have a
negative impact on a nation's currency.

Inflation levels and trends: Typically a currency will lose value if there is a high
level of inflation in the country or if inflation levels are perceived to be rising. This is
because inflation erodes purchasing power, thus demand, for that particular
currency.However, a currency may sometimes strengthen when inflation rises because
of expectations that the central bank will raise short-term interest rates to combat
rising inflation.

Economic growth and health: Reports such as GDP, employment levels, retail
sales,capacity utilization and others, detail the levels of a country's economic growth
and health. Generally, the more healthy and robust a country's economy, the better its
currency will perform, and the more demand for it there will be.
21

Productivity of an economy: Increasing productivity in an economy should

positively influence the value of its currency. Its effects are more prominent if the
increase is in the traded sector.

b.Political conditions

Internal, regional, and international political conditions and events can have a
profound effect on currency markets.

All exchange rates are susceptible to political instability and anticipations about the
new ruling party. Political upheaval and instability can have a negative impact on a
nation's economy. For example, destabilization of coalition governments in Pakistan
and Thailand can negatively affect the value of their currencies. Similarly, in a
country experiencing financial difficulties, the rise of a political faction that is
perceived to be fiscally responsible can have the opposite effect. Also, events in one
country in a region may spur positive/negative interest in a neighboring country
and,in the process, affect its currency.

c.Market psychology

Market psychology and trader perceptions influence the foreign exchange market in a
variety of ways:

Flights to quality: Unsettling international events can lead to a "flight to quality," a

type of capital flight whereby investors move their assets to a perceived "safe
haven."There will be a greater demand, thus a higher price, for currencies perceived
as stronger over their relatively weaker counterparts. The U.S. dollar, Swiss franc and
gold have been traditional safe havens during times of political or economic
uncertainty.

Long-term trends: Currency markets often move in visible long-term trends.

Although currencies do not have an annual growing season like physical
commodities, business cycles do make themselves felt. Cycle analysis looks at longerterm price trends that may rise from economic or political trends.

"Buy the rumor, sell the fact": This market truism can apply to many currency
situations. It is the tendency for the price of a currency to reflect the impact of a
particular action before it occurs and, when the anticipated event comes to pass, react

in exactly the opposite direction. This may also be referred to as a market

being"oversold" or "overbought". To buy the rumor or sell the fact can also be an
22
example of the cognitive bias known as anchoring, when investors focus too much on
the relevance of outside events to currency prices.

Economic numbers: While economic numbers can certainly reflect economic

policy,some reports and numbers take on a talisman-like effect: the number itself
becomes important to market psychology and may have an immediate impact on
short-term market moves. "What to watch" can change over time.

23

Chapter-4
Questionnaire

24

1. Demographic questions
Gender
Gender

No. Of respondent

Male
Female

38
12

No. Of respondent in
%
76
24

Gender

Female
24%

Male
76%

Interpretation
This chart shows that male are more interested than female in currency market.
25

Age (years)
Age (Years)

No. Of respondent

20-30
30-40
40-50
50 & above

8
21
6
5

No. Of respondent in
%
22
58
17
3

Age
50&above
3%
20-30
22%

40-50
17%

30-40
58%

Interpretation
This chart shows that age group 30-40 is more interested than other age groups in
currency market.
26

Educational Qualification
Educational
Qualification
H.S.C
Graduate
Post Graduate
Others

No. Of respondent
5
27
16
2

No. Of respondent in
%
10
54
32
4

Educational Qualification
others
4%

H.S.C
10%

Post graduate
32%

Graduate
54%

Interpretation
This chart shows that graduates is more interested than other other educational
qualification in currency market.
27

Occupation
Occupation

No. Of respondent

Business
Self Employment
Service
Student
House wife
others

22
13
10
2
3
0

No. Of respondent in
%
44
26
20
4
6

Occupation
student
4%

service
21%

bussiness
47%

self emloyment
28%

Interpretation
This chart shows that the person have business occupation is more interested than
other other occupation in currency market.
28

Annual Income (Rs)

Income

No. Of respondent

<= 2,00,000
2,00,000-3,50,000
3,50.001-5,00,000
5,00,001=<

4
19
20
7

No. Of respondent in
%
9
43
45
3

Income
<=2,00,000
5,00,001=< 8%
14%

2,00,000-3,50,000
38%

3,50,001-5,00,000
40%

Interpretation
This chart shows that the people have business annual income 3.50,001-5,00,000 is
more interested than people have annual income 2,00,000-3,50,000 by just 2% in
currency market.
29

2.Main Questions

1. In which currency do you want to prefer invest?

Currency

No. Of respondent

USD
EURO
GBP
YEN
Other

20
15
11
3
1

No. Of respondent in
%
40
30
22
36
2

Currency
Other
YEN
2%
6%

GBP
22%

USD
40%

EURO
30%

Interpretation
This chart shows that the people are more interested in investing USD than other
currency in currency market.
30

2. What is the primary objective of your investment in

currency?
Objectivity

No. Of respondent

Hedging
Volatility
Speculation
Arbitrage

23
17
8
2

No. Of respondent in
%
46
34
16
4

Objectivity
Arbitrage
4%
Speculation
16%

Hedging
46%

Volatility
34%

Interpretation
This chart shows that the most people have hedging objectivity investing in currency
market.
31

3. What is the time duration you invest in currency?

Time period

No. Of respondent

Intraday
Less than 1 month
1-2 months
2-3 months
More than 3 months

5
26
14
3
2

No. Of respondent in
%
10
52
28
6
4

Time Period
more than 3 months
Intra day
4%
2-3 month
10%
6%

1-2 month
28%

Less than 1 month

52%

Interpretation
This chart shows that the people prefer to invest less than one month in currency
market.
32

4. What factors do you determine at the time of investing in

currency?
Factors

No. Of respondent

Economy
Political
Industrial
Export-import
Infrastructure
Other

20
5
10
12
3
0

No. Of respondent in
%
40
10
20
24
6
0

Factors
Infrastructure
6%

Exprt-Import
24%

Industrial
20%

Economy
40%

Political
10%

Interpretation
This chart shows that the people determine economic factors at the time of investing
in currency market.
33

5. How many percentage of money do you invest in currency

from your income?
%age of money

No. Of respondent

<=10
11-20
21-30
30>=

11
25
9
5

No. Of respondent in
%
22
18
10
50

%age of money
30%<=
10%
<=10%
22%
21-30%
18%

11-20%
50%

Interpretation
This chart shows that the mostly people invest more than 30% of their income in
currency market.
34

6. Which currency do you most rely on?

Currency

No. Of respondent

USD
EURO
GBP
YEN
Other

18
16
11
5
0

No. Of respondent in
%
36
32
22
10
0

Currency
YEN
10%

USD
36%

GBP
22%

EURO
32%

Interpretation
This chart shows that the mostly people rely on USD and EURO more other than any
currency30% of in currency market.
35

7. Type of return you expect in currency market?

Scale

No. Of respondent

Very low
Low
Natural
High
Very High

2
6
16
22
4

No. Of respondent in
%
4
12
32
44
8

Sc ale
Very high
8%

Very low
4%
Low
12%

High
44%

Natural
32%

Interpretation
This chart shows that the mostly people expect high returns on their investment in
currency from currency market.
36

8. How much riskier is currency market?

Scale

No. Of respondent

Very low
Low
Natural
High
Very High

20
16
10
3
1

No. Of respondent in
%
40
32
20
6
2

Scale
Very high
High
2%
6%

Natural
20%

Very low
40%

low
32%

Interpretation
This chart shows that the mostly people thinks that currency market is very less risky.
37

Chapter-5
Conclusion

38

Conclusion
The survey I have carried out on Impact of currency market in India. The conclusion
of the survey is as follows.

The awareness of the forex market in India is very low in compare to other financial
instruments. Only fewer people know about the currency trading. As the gender wise
male investors are more investing than women investors. But the education level is as
well a positive sign of women also taking interest in forex market. The equity and
commodity investors are as well investing in currency. In India USD, EURO, GBP,
and JPY are the currencies been traded most.

USD and EURO are the most preferred currency in response from the respondents.
there is high volume in this two currency pair in India. USD is on first position to
trade in India, as per the data of MCX-SX the volume of USD/INR of June contract
3588917 in lots as on 3 rd June 2015. The EURO is on second to be traded in India.
The data of MCX-SX volume in EURO/INR is 156556 in lots, as on 3rd june 2015.
GBP and JPY are been traded in India on 3 rd and 4th position respectively. The volume
in GBP/INR was 58255 in lots and volume in JPY/INR was 23628 in lots as on 3 rd
June 2015 respectively.

In future 36% & 32% of respondent are relay on USD & EURO respectively. But in
future as per the report of Bank Of Japan Change in the total quantity of domestic
currency in circulation and current account deposits held at BOJ, It's positively
correlated with interest rates-early in the economic cycle an increasing supply of
money leads to additional spending and investment, and later in the cycle expanding
money supply leads to inflation. This release would be affect the JPY rate.

The earning in currency market is low in comparison of Equity or Commodity market.

The volatility in currency rates is very less. It doesnt volatile as equity or commodity
market. The risk is also very less in the currency market. The main or primary object
of investing in currency market by investor is hedging. More number of respondents

is connected in the business of Import-Export. They use to hedge the currency market
for future payment and earn the deference.

39

Annexure
1.What is the gender of the person who are responding?
A. Male ()
B.Female ()
2.What is the age group of the person who are responding?(in
years)
A.20-30 ()
B.30-40 ()
C.40-50 ()
D.50 & above ()
3.What is the educatinal qualification of the person who are
responding?
A.H.S.C ()
B.Graduate ()
C.Post Graduate ()
D.Others ()
4.What is the occupation of the person who are responding?
A.Business ()
B.Self Employment ()
C.Service ()

D.Student ()
E.House Wife ()
F.Others ()
5.What is the annual income of the person who are responding?
A.Less than 2 lakh ()
B.2,00,000-3,50,000 ()
C.3,50,001-5,00,000 ()
D.More than 5 lakh ()
6.In which currency do you want to prefer invest?
A.USD ( )
B.EURO ( )
C.GBP ( )
D.YEN ( )
7.What is the primary objective of your investment in currency?
A.Hedging ( )
40
B.Volatility ( )
C.Speculation ( )
D.Arbitrage ( )
8.What is the time duration you invest in currency?
A.Intraday ( )
B.Less than 1 month ( )
C.1-2 months ( )
D.2-3 months ( )
E.More than 3 months ( )
9.What factors do you determine at the time of investing in currency?
A.Economy ( )
B.Political ( )
C.Industrial ( )
D.Export-Import ( )
E.Infrastructure ( )
F.Others ( )
10.How many percentage of money do you invest in currency from your income?
(in %)
A.Less than 10 ( )
B.11-20 ( )
C.21-30 ( )
D.More than 30 ( )

11.Which currency do you most rely on?

A.USD ( )
B.EUR ( )
C.GBP ( )
D.YEN ( )
E.Other ( )
12.Type of return you expect in currency market?
A.Very low ( )
B.Low ( )
C.Natural ( )
D.High ( )
E.Very high ( )
13.How much riskier is currency market?
A.Very less ( )
B.Less ( )
C.Normal ( )
D.More ( )
E.Much More ( )

41

Recommendation

The purpose of a company is to operate well and generate revenues with having a
good image in market.The market is full of competitors with new entrants entering the
market daily. So, a company should have some unique features of operations to
survive in the market.
The company Weizard Forex Pvt. Ltd. believes in direct marketing by the means of
face-to-face marketing.
In this study, it is founded that the direct marketing strategy is the strength of the
companys sales and is the most effective way for selling their services.Also, the
customers are very satisfied with the company and want to do business with them in
future.
So, direct marketing is the back bone of the company and helps in solving the queries
of the customers on the spot. Customers are also satisfied with the services offered by
the company.
The quality of the services is found out to be a great reason for its sales. Also, the
company needs to pay more attention to its pricing strategies as it can greatly affect its
customer base.In the end, this company shows the direct application of direct
marketing and how it is effective for the company for generating the sales.

The direct marketing strategy of the company is hugely popular among its customers
and is the most promising way for promotion of its services and satisfying its
customers by solving their queries on the spot leading to enhancement in its market
image.

42

Bibliography
Book-How to make money trading derivative (Ashwani Gujral)

Book-How to make money trading with charts (Ashwani Gujral)

http://stocktraderschat.com/

http://www.mas.gov.sg/source/publications/staff papers/MASOP013-ed.pdf

http://worldwide.pioneerinvestments.com/pdfs/market_updates/monthly/investment_f
ocus_currency.pdf

http://www.gaincapital.com/files/NYPost_2002_03.pdf

http:/www.finance.org.tw/2004conference/PAPER/Market20%and%20currency
%20Risk%20in%20asian%20Emerging%20Markets.pdf

http://users.cjb.net/startforex/forex%20resources.pdf

http://www.gscurrentaffairs.com/currency-war-and-its-impact-on-indian-economy

http;//www.imf.com

43