2. Exchange function. Buying and selling currencies in the foreign exchange market, changing one currency into another as a means of payment, has realized the effective conversion of purchasing power of different currencies.
3。 Credit function. 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.
4. Hedging function. That is, hedging futures trading. It is very important for importers and exporters that foreign exchange income will not suffer losses 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.
Step 5 speculate. 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 exchange rate changes to make profits, produce "bulls" and "bears" and bet on future market conditions. 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.
Extended data:
Influencing factors of foreign exchange market
1. economic situation: the comprehensive effect of a country's economy is the most direct and important factor affecting its currency exchange rate. Among them, we mainly consider the level of economic growth, balance of payments, inflation and interest rates.
2. Military dynamics: wars, local conflicts, etc. It will cause a sense of insecurity in a certain region, which will have a negative impact on the exchange rates of related regions and weak currencies, but will be beneficial to the exchange rates of currencies far away from the countries where the incident occurred and traditional safe-haven currencies.
3. Market psychology: The psychological expectations of participants in the foreign exchange market have a serious impact on the exchange rate trend. For the appreciation or depreciation of a currency, the market often forms its own views. When an understanding is reached, the exchange rate will change within a certain period of time. At this time, exchange rate fluctuations may be completely divorced from fundamentals or central bank intervention is ineffective.
4. Emergencies: Some major emergencies will have an impact on the market psychology, thus changing the exchange rate, and the degree of the result will also have an impact on the long-term change of the exchange rate. For example, the 9 1 1 incident caused the dollar to depreciate sharply in a short time.
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