The role of foreign exchange market ① International settlement. Because foreign exchange is a means of payment and liquidation in international economic exchanges, liquidation is the most basic function of the foreign exchange market.
2 credits. Because banks are engaged in foreign exchange business, it is possible to provide loans to importers and exporters by using the time difference between foreign exchange receipts and payments.
3 hedging. That is, hedging futures trading. This is different from the purpose of speculative futures trading. It is very important for importers and exporters not to profit from price changes, but to prevent foreign exchange income from being lost due to future exchange rate changes. If the exporter has forward foreign exchange income, in order to avoid the possible risks caused by exchange rate changes, the foreign exchange can be sold as futures; On the contrary, importers can also buy foreign exchange futures in the foreign exchange market to meet the needs of future payment.
4 speculation. That is to say, buying and selling foreign exchange in the case of expected price changes. In the forward foreign exchange market, speculators can take advantage of the change of exchange rate to make profits, which leads to? Bull? And then what? Short? Bet on the future market. ? Bull? If the exchange rate of a foreign currency is expected to rise, that is, it is bought at the current price, and when the exchange rate of the foreign currency rises at the time of forward delivery, it is pressed? Immediate results? If you sell the price immediately, you can get the difference of exchange rate changes. Conversely, short? It is expected that the exchange rate of a foreign currency will fall, that is, the foreign currency for forward delivery will be sold at the current price, and the price will fall after maturity. Immediate results? Buy it and make it up. This kind of speculation is carried out by taking advantage of the fluctuation of foreign exchange market in different periods. In the same market, you can also take advantage of the exchange rate differences in different markets to carry out arbitrage activities at the same time.
The classification of foreign exchange market is based on the external forms of foreign exchange market, which can be divided into intangible foreign exchange market and tangible foreign exchange market.
Intangible foreign exchange market, also known as abstract foreign exchange market, refers to the foreign exchange market without a fixed specific place. This market was first popular in Britain and America, so its organizational form is called the Anglo-American way. This organizational form not only extends to Canada, Tokyo and other regions, but also penetrates into the European continent. The main characteristics of the intangible foreign exchange market are: first, there is no definite opening and closing time. Second, foreign exchange buyers and sellers do not need to conduct face-to-face transactions, and foreign exchange suppliers and demanders can contact foreign exchange institutions through telecommunications equipment such as telex, telegram and telephone. Third, there is a good trust relationship between the subjects, otherwise, this transaction will be difficult to complete. At present, except for some foreign exchange transactions between banks and customers in some European countries, foreign exchange transactions in all countries of the world are conducted through modern communication networks. Intangible foreign exchange market has become the dominant form of foreign exchange market today.
According to the degree of foreign exchange control, the foreign exchange market can be divided into free foreign exchange market, foreign exchange black market and official market.
Official market: refers to the market where foreign exchange is traded according to the government's foreign exchange management regulations. This foreign exchange market has specific regulations on participants, exchange rates and trading processes. Official markets are more common in developing countries.
According to the scope of foreign exchange transactions, the foreign exchange market can be divided into foreign exchange wholesale market and foreign exchange retail market.
Foreign exchange wholesale market: refers to the behavior and place where banks conduct foreign exchange transactions. Its main feature is the large scale of transactions.
The functions of the foreign exchange market are mainly manifested in three aspects: one is to realize the international transfer of purchasing power, the other is to provide financing, and the third is to provide market mechanism for foreign exchange preservation and speculation.
1. Realize the international transfer of purchasing power
International trade and international financing involve at least two currencies, and different currencies form purchasing power for different countries, which requires that the country's currency be converted into foreign currency to clear up the relationship between creditor's rights and debts and realize the purchase behavior. And this exchange is carried out in the foreign exchange market. The foreign exchange market provides an economic mechanism for this kind of purchasing power transfer transaction to proceed smoothly, and its existence is related to the wishes of various potential foreign exchange sellers and foreign exchange buyers. When the exchange rate changes in the foreign exchange market make the foreign exchange supply just equal to the foreign exchange demand, all potential selling and buying desires are satisfied and the foreign exchange market is in a state of balance. In this way, the foreign exchange market provides an international transfer mechanism of purchasing power. At the same time, because the developed communication tools integrate the foreign exchange markets around the world, currency exchange and fund remittance can be completed in a very short time, and this transfer of purchasing power becomes rapid and convenient.
Step 2 provide financing
The foreign exchange market provides financing facilities for international traders. The foreign exchange deposit and loan business concentrates the idle funds of various countries, adjusts the surplus and deficiency, and speeds up the capital turnover. The foreign exchange market provides a guarantee for the smooth progress of international trade. When the importer doesn't have enough cash to pick up the goods, the exporter can draw a draft on the importer, allow deferred payment, and sell the draft in the form of discounted bills to get back the payment. The convenient financing function of the foreign exchange market has also promoted the smooth progress of international lending and investment activities. Most treasury bills and government bonds issued by the United States are purchased and held by foreign official institutions and enterprises. This kind of securities investment is unthinkable without a foreign exchange market.
3. Provide a mechanism for foreign exchange hedging and speculation.
In international economic transactions denominated in foreign exchange, both sides are faced with foreign exchange risks. Because market participants have different judgments and preferences on foreign exchange risks, some participants are more willing to spend a certain cost to transfer risks, while others are willing to take risks to achieve expected returns. There are two different behaviors: foreign exchange hedging and foreign exchange speculation. Under the gold standard and fixed exchange rate system, the foreign exchange rate is basically stable, and there will be no need and possibility of foreign exchange hedging and speculation. Under the floating exchange rate, the function of the foreign exchange market has been further developed. The existence of foreign exchange market not only provides hedgers with a place to avoid foreign exchange risks, but also provides speculators with opportunities to take risks and gain profits.
Characteristics of foreign exchange market 1, with market but no market.
There are basically two financial systems in Europe and other western countries, namely, centralized operation of centralized transactions and merchant networks without unified fixed places. Stocks are bought and sold through exchanges.
For example, new york Stock Exchange, London Stock Exchange and Tokyo Stock Exchange are the main trading places for stocks in the United States, Britain and Japan. Financial products traded in a centralized way have unified provisions on their quotation, trading time and settlement procedures, and trade associations have been established and trading norms have been formulated.
Investors buy and sell the goods they need through brokerage companies. That's it? Is there a market and a field? . However, foreign exchange transactions are conducted through a dealer network without a unified operating market, unlike the centralized and unified place for stock trading. However, the foreign exchange trading network is global and has formed an unorganized institution. The market is connected with advanced information systems in a way that everyone agrees with. Traders do not have the membership of any organization, but they must gain the trust and recognition of the same industry.
What is the name of this foreign exchange trading market without a unified venue? Is there a market with no market? . The global foreign exchange market trades trillions of dollars on average every day. Such a huge sum of money was cleared and transferred in this place which was neither centralized nor controlled by the central clearing system, and without the supervision of the government.
2. Cycle operation
Due to the different geographical locations of financial centers around the world, the Asian market, the European market and the American market have become a global foreign exchange market that operates 24 hours a day because of the time difference. At 8: 30 in the morning (subject to new york time), the new york market opens at 9: 30 in Chicago, at 0: 30 in San Francisco/KLOC-0, at 8: 30 in Sydney/KLOC-0, at 9: 30 in Tokyo/KLOC-0, at 20: 30 in Hong Kong and Singapore, at 2: 30 in Frankfurt and at 3: 00 in London.
In this way, the foreign exchange market will become a day and night market, and it will only be closed on Saturday and Sunday and major festivals in various countries. This continuous operation provides an ideal investment place for investors, and investors can find the best trading opportunity without the obstacles of time and space.
For example, if an investor buys yen in the new york market in the morning and the yen rises after the opening of the Hong Kong market in the evening, and the investor sells it in the Hong Kong market, then he can participate in trading in any market and at any time, no matter where the investor himself is. Therefore, the foreign exchange market can be said to be a market without time and space obstacles.
3, zero-sum game
In the stock market, if a stock or the whole stock market rises or falls, then the value of the stock or the whole stock market will also rise or fall. For example, the share price of Nippon Steel in Japan has dropped from 800 yen to 400 yen, so the value of all shares of Nippon Steel has also been reduced by half.
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