Post on 19-Jun-2015
Foreign Exchange Markets
Presented ByAJINKAY VELAPURE (C-83)
ASHOK PATEL (C-15)SANDEEP RAMRAJE (C-19)
SANTOSH SANAP (C-26)
NCRD's STERLING INSTITUTE OF MANAGEMENT STUDIES
STRUCTURE OF FOREX
FOREX MARKET
ACCORIDNG TO
TRANSACTION
DERIVATIVES
FOREX MARKET
FINANCIAL MARKET
PARTICIPANT
Spot Market Forward Market
Futures Market Swaps
Market
Options
Market
Wholesale /
Inter Bank
Market
Retail or
Client
Market
FERA AND FEMARegulated in India by the Foreign Exchange
Regulation Act(FERA),1973.Consisted of 81 sections.FERA Emphasized strict exchange control.Control everything that was specified,
relating to foreign exchange.Law violators were treated as criminal
offenders.Aimed at minimizing dealings in foreign
exchange and foreign securities.
FERA AND FEMA CONT…..DIFFERENCES FERA FEMA
PROVISIONS FERA consisted of 81 sections, and was more complex
FEMA is much simple, and consist of only 49 sections.
FEATURES Presumption of negative intention (Mens Rea ) and joining hands in offence (abatement) existed in FEMA
These presumptions of Mens Rea and abatement have been excluded in FEMA
NEW TERMS IN FEMA Terms like Capital Account Transaction, current Account Transaction, person, service etc. were not defined in FERA.
Terms like Capital Account Transaction, current account Transaction person, service etc., have been defined in detail in FEMA
DEFINITION OF AUTHORIZED PERSON Definition of "Authorized Person" in FERA was a narrow one ( 2(b)
The definition of Authorized person has been widened to include banks, money changes, off shore banking Units etc. (2 ( c )
MEANING OF "RESIDENT" AS COMPARED WITH INCOME TAX ACT.
There was a big difference in the definition of "Resident", under FERA, and Income Tax Act
The provision of FEMA, are in consistent with income Tax Act, in respect to the definition of term " Resident".
FERA AND FEMA CONT…..DIFFERENCES FERA FEMA
PUNISHMENT Criminal offence , punishable with imprisonment as per code of criminal procedure, 1973
Civil offence only punishable with some amount of money as a penalty. Imprisonment is prescribed only when one fails to pay the penalty.
APPEAL An appeal against the order of "Adjudicating office", Board went before High Court
An appeal from an order of Appellate Tribunal would lie to the High Court. (sec 17,18,35)
RIGHT OF ASSISTANCE DURING LEGAL PROCEEDINGS.
Did not contain Recognizes the right of appellant to take assistance of legal practitioner or chartered accountant (32)
POWER OF SEARCH AND SEIZE
FERA conferred wide powers on a police officer not below the rank of a Deputy Superintendent of Police to make a search
The scope and power of search and seizure has been curtailed to a great extent
HOW THE CURRENCY RATE EXCHANGE IS CALCULATED?
Trade value, inflation, and interest rates.1 UD Dollar = 1 British PoundAmericans own $100 & British own 100 Pounds.
CHARACTERISTICS OF THE FOREX MARKET
24-Hour MarketLeverageHigh liquidityOTC Market
EVOLUTION OF THE FOREX MARKETS
Over the past 200+ years, the world has gone though major changes its global exchange rate environment.
Gold Standard: 1816 - 1914 Bretton Woods: 1945 – 1973Smithsonian Agreement : 1971-1973The European Snake – 1972OPEC Oil Crisis – 1976European Monetary System (E.M.S) – 1979The Maastricht Treaty – 1991Birth of Euro - 1999
CURRENT EXCHANGE RATE SYSTEMS
Current exchange rate systems
Pegged/fixed Flexible/floating
Hard peg Soft peg Free float Managed float
Adjustable peg
Basket currency
Crawling peg
MAJOR CURRENCY PAIRS
MAJOR CURRENCY PAIRS
PURPOSES OF FOREIGN EXCHANGE TRADING
Fundamental analysis Technical analysisCurrency trading between banks
FLUCTUATIONS
Differentials in InflationDifferentials in Interest RatesCurrent-Account DeficitsPublic DebtTerms of TradePolitical Stability and Economic
Performance
FOREX RISKThe fraud and Scams in Forex market There is risk of losing your whole
investment! The market sometimes moves against
you! There is no main marketplace! You are relying on the dealer's
reputation credit reliability There's a risk of the trading system
break down! You can become a fraud victim!
FOREX RISK MANAGEMENT
Why is Forex risk management important?
Controlling losses
Using correct lot sizes
Tracking overall exposure
The bottom line
TURNOVER
CONCLUSION & BILBLIOGRAPHY
Websites 1. Wikipedia 2. www.nse-india.com 3. www.bis.org 4. www.qfinance.com 5. www.trading-point.com 6. http://forextrading.about.com 7. www.nse.com 8. www.investorguide.com 9. http://forexcap.com/FXGuide/evoluaion-of-fx-market.aspx 10.Http://wiki.answers.com/Q/
How_is_the_currency_exchange_rate_calculated