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Foreign exchange rates

Discuss Global Financial Stability

o Balance of payments

o Countertrade

o Eurocurrency market

o Foreign exchange rates

o International banking facilities

o London Interbank Offered Rate

o International Banking Act of 1978

· Explain how the topic you chose relates to the growth of U.S. banking overseas. Include information how your topic contributes to interdependence among economies and financial markets, and to global financial stability. Use at least three sources, including the readings.

· Format your paper according to APA standards.

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Discuss Global Financial Stability

o Balance of payments

o Countertrade

o Eurocurrency market

o Foreign exchange rates

o International banking facilities

o London Interbank Offered Rate

o International Banking Act of 1978

Explain how the topic you chose relates to the growth of U.S. banking overseas. Include information how your topic contributes to interdependence among economies and financial markets, and to global financial stability. Use at least three sources, including the readings.

Foreign exchange rates
"Foreign exchange market, or the "FX" market, is where the buying and selling of different currencies takes place. The price of one currency in terms of another is called an exchange rate." (Newyorkfed, 2010) Major foreign exchange market participants are banks, brokers, customers, and central banks. Out of these Banks are the biggest participants and earn profits by selling and buying foreign exchange. Central banks act on behalf of their governments. With more than $1.2 trillion changing hands every day, the activity of these participants affects the value of every dollar, pound, yen or euro.

The participants in the FX market trade for a variety of reasons:

? For earning short-term profits
? For protecting themselves from loss due to changes in exchange rates, and
? For acquiring the foreign currency necessary to buy goods and services from other countries.
Foreign exchange rates leads to exchange rate risk due to foreign exchange fluctuation. There are three kinds of foreign exchange risk. First is transaction risk. Transaction exposure arises whenever a company is committed to a foreign-currency-denominated transaction. Translation exposure is the change in the value of a firm's foreign currency denominated accounts due ...

Solution Summary

Response discusses the Foreign exchange rates

$2.19