EC249 Lecture 7: Lecture 7 EC249
Document Summary
Chapter 4: foreign exchange: a lot of the fx market is speculation done automatically by computers. Risk-free profit: algorithms are shaping the fx market. Companies are trying to speed up how quickly they interact. Make trades quicker, make more money: the fx market. In 2010, the bank of international settlements (bis), estimated daily volume of trading in the spot and foreign exchange market to be usd 3. 73 trillion. Equivalent to us per day for every person on earth. Since 2010, trading in the fx market grew 35% to reach an all-time high of us. 3 trillion: fx market used to buy and sell currencies to purchase goods between different nations. Travelling to mexico, need to buy pesos in order to travel and purchase goods. Makes trade unfair between countries as it affects their competitiveness. Has nothing to do with countries" actual competitiveness. Not an efficient way of operating a market. Smaller side of the fx market: commercial: wholesale, commercial: wholesale.
