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FOreign exchange market
Title: FOreign exchange market
Category: Business & Economy / Global Economy
Details: Words: 6288 | Pages: 26.8 (approximately 235 words/page)
FOreign exchange market
The Foreign Exchange Market
Concepts
1.<Tab/>Value Date:
The settlement of a transaction takes place by transfers of deposits between two parties. The day on which these transfers are effected is called the Settlement Date or the Value Date.
2.<Tab/>Spot Rate:
When the exchange of currencies takes place on the second working day after the date of the deal, it is called spot rate.
3.<…showed first 75 words of 6288 total…
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…showed last 75 words of 6288 total…forward 20/ 10
3- month forward 30/ 15
Calculate the outright forward rates.
Ans. While observing the forward quotations, it is clear that the US dollar is at discount in the forward market since the points corresponding to the bid price are higher than those corresponding to the ask price. Therefore, the forward points will be subtracted form the spot rate figure. Thus, the outright rates are:
<Tab/> DEM/$ spot - 1.5880/ 90
1 - month forward - 1.5870/ 85
2 - month forward - 1.5860/ 80
3 - month forward - 1.5850/ 75
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