MAF202 Lecture Notes - Lecture 9: Japanese Yen, Forward Exchange Rate, Spot Contract
Document Summary
Exchange rate = the value of one currency relative to another. 1 us dollar is equal to 1. 3888 au dollars. Comprise all financial transactions denominated in foreign currency. Worth more than usd5 trillion per day. Facilitate exchange of value from one currency to another. Investors and borrowers in the international capital markets. Fx dealers: are financial institutions, typically commercial banks and investment banks that quote two way (i. e. buy and sell) prices and act as principals in the fx market. Usually licensed or authorised by the central banks within the country they operate in. Fx brokers: transact almost exclusively with fx dealers, obtain the best prices in global fx markets matching fx dealer buy and sell offers for a fee. Exporters receive foreign currency for the sale of their goods and services. Exporters use the fx market to sell foreign currency and buy aud. Importers use the fx market to buy foreign currency (sell aud) for purchasing their imports.
