BUSI2025 Lecture Notes - Lecture 9: Foreign Exchange Market, Foreign Exchange Risk, The Foreign Exchange
Document Summary
The foreign exchange market: is used to convert the currency of one country into the currency of another, provides some insurance against foreign exchange risk - the adverse consequences of unpredictable changes in exchange rates. The exchange rate is the rate at which one currency is converted into another. Events in the foreign exchange market affect firm sales, profits, and strategy. Us. 1 trillion per day in april 2016, down from . 4 trillion daily in april 2013 (bank for international. The us dollar is the most important currency on the foreign exchange market. Top two pairs include eur/usd and usd/jpy. Aud/usd accounts for 92% of australian daily fx turnover. To insure or hedge against a possible adverse foreign exchange rate movement, firms engage in forward exchanges: two parties agree to exchange currency and execute the deal at some specific date in the future.
