Major foreign exchange trading markets in the world
The world foreign exchange market is a huge system, which consists of the foreign exchange markets of various international financial centers. At present, there are more than 30 foreign exchange markets in the world, the most important of which are London, new york, Paris, Tokyo, Switzerland, Singapore, Hong Kong and other cities. They have their own characteristics, located in different countries and regions, and are interrelated to form a global unified foreign exchange market. At the same time, because the central cities are located in different time zones, the business hours are staggered, and they are connected with each other through advanced communication equipment and computer networks. Market participants can trade all over the world around the clock, thus becoming a global 24-hour uninterrupted trading market.
London foreign exchange market
London foreign exchange market is a typical intangible market. There is no fixed trading place, but foreign exchange transactions are completed by telephone, telex and telegram. In the London foreign exchange market, about 600 foreign exchange banking institutions participate in foreign exchange transactions, including domestic clearing banks, commercial banks, other commercial banks, discount companies and foreign banks. These foreign exchange banks have formed the London Association of Foreign Exchange Banks, which is responsible for formulating rules and charging standards for participating in foreign exchange market transactions.
There are about 250 designated dealers in the London foreign exchange market. As foreign exchange brokers, they and foreign currency deposit brokers form the Association of Foreign Exchange Brokers and Foreign Currency Deposit Brokers. During the implementation of foreign exchange control in Britain, foreign exchange transactions between foreign exchange banks were generally conducted through foreign exchange brokers. 1979 10, after the abolition of foreign exchange control in Britain, foreign exchange transactions between foreign exchange banks do not have to go through foreign exchange brokers.
Foreign exchange transactions in the London foreign exchange market are divided into spot transactions and forward transactions. The exchange rate quotation adopts indirect pricing method, and there are many kinds of trading currencies, up to more than 80 kinds. Foreign currency arbitrage in the London foreign exchange market is very active. Since the development of European currency market, foreign exchange transactions in London foreign exchange market have been closely related to deposits in "European currency". The European Investment Bank actively issued a large number of Eurobonds in the London market, which made the international nature of the London foreign exchange market more prominent.
New york foreign exchange market
New york's foreign exchange market is one of the important international foreign exchange markets, and its daily trading volume is second only to London. New york's foreign exchange market is also an invisible market. Foreign exchange transactions are conducted through modern communication networks and electronic computers, and its currency settlement can be conducted through the inter-bank clearing system in new york and the payment system of the Federal Reserve Bank.
Because the United States has no foreign exchange control, no restrictions on foreign exchange business, and the government has not designated a special foreign exchange bank, almost all American banks and financial institutions can operate foreign exchange business. However, the participants in new york's foreign exchange market are mainly commercial banks, including branches, correspondent banks and representative offices of more than 50 American banks and more than 200 foreign banks in new york. Foreign exchange transactions in new york's foreign exchange market are divided into three levels: foreign exchange transactions between banks and customers, and foreign exchange transactions between domestic banks and foreign banks. Among them, most foreign exchange transactions between banks are conducted through foreign exchange brokers. There are eight brokers in new york foreign exchange market. Although some of them specialize in buying and selling certain foreign exchange, most of them also trade in multiple currencies at the same time. The business of foreign exchange brokers is not subject to any supervision, and they do not bear any economic responsibility for the transactions arranged by them. They only charge commissions to the sellers after each transaction is completed.
Paris foreign exchange market
Paris foreign exchange market consists of tangible market and intangible market. The tangible market mainly refers to the foreign exchange trading of the Paris Stock Exchange, which is the same as the securities market, and the official foreign exchange quotation is published every day. However, a large number of foreign exchange transactions are conducted outside the exchange, such as direct transactions by telephone or brokers.
Tokyo foreign exchange market
Tokyo foreign exchange market is an invisible market, and traders trade through modern communication facilities. There are five types of participants in the Tokyo foreign exchange market: one is a professional foreign exchange bank, namely the Bank of Tokyo; 2. Designated foreign exchange banks refer to more than 340 banks that can engage in foreign exchange business, including 243 domestic banks and 99 overseas banks; Third, there are 8 foreign exchange brokers; Fourth, the Bank of Japan; Fifth, non-bank customers are mainly enterprise legal persons, import and export enterprises trading companies, life and property insurance companies, investment trust companies, trust banks and so on.
In Tokyo foreign exchange market, foreign exchange transactions between banks can be conducted through foreign exchange brokers or directly. Japanese enterprises and individuals must conduct foreign exchange transactions through designated foreign exchange banks. There are two kinds of exchange rates: one is the listed exchange rate, including interest rate risk, handling fees and other exchange rates. At about 10 every business day morning, banks are listed on the basis of the actual exchange rate in the interbank market, and in principle, the listed exchange rate will not be changed on that day. The second is the market linked exchange rate, which is based on the actual exchange rate in the interbank market.
Swiss foreign exchange market
Zurich, Switzerland is a foreign exchange market with a historical tradition, which plays an important role in international foreign exchange transactions. This is partly because the Swiss franc is a freely convertible currency; On the other hand, because Switzerland was a neutral country during World War II, the foreign exchange market was not affected by the war and has always insisted on opening to the outside world. Switzerland once ranked fourth in the world in terms of trading volume, but in recent years it has been surpassed by Singapore's foreign exchange market.
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Singapore's foreign exchange market became an international foreign exchange market only after the establishment of the Asian dollar market in the early 1970s. Singapore is located in Europe, Asia and Africa, with a superior time zone. You can trade with Hongkong, Tokyo and Sydney in the morning, London, Zurich and Frankfurt in the afternoon, Bahrain in the Middle East at noon and new york in the evening. According to the needs of trading, foreign exchange can be bought and sold around the world 24 hours a day. In addition to maintaining a modern communication network, Singapore's foreign exchange market is also directly connected with new york's CHIPS system and Europe's SWIFT (Global Banking, Finance and Telecommunications Association) system, making currency settlement very convenient.
hong kong foreign exchange market
Hong Kong's foreign exchange market is an international foreign exchange market developed after 1970s. Since 1973 Hong Kong abolished foreign exchange control, a large amount of international capital has flowed in, financial institutions engaged in foreign exchange business have been increasing, and the foreign exchange market has become more and more active and developed into an international foreign exchange market.
Hong Kong's foreign exchange market is an invisible market without a fixed trading place. Traders conduct foreign exchange transactions through various modern communication facilities and computer networks. Hong Kong's geographical location and time zone conditions are similar to those of Singapore, and it is very convenient to trade with other international foreign exchange markets.
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Dollar and dollar index
The US dollar is not only the legal tender of the United States, but also the legal tender of El Salvador, Panama, Ecuador, East Timor, Marshall Islands, Micronesia (Federated States of), Kiribati and Palau.
During the Second World War, the international monetary system was in chaos. In order to solve this chaotic situation,1in July, 944, on the eve of the imminent victory of the Second World War, 44 allies, under the organization of Britain and the United States, held an "International Monetary and Financial Conference with 730 participants in a hotel in forest village, New Hampshire, USA. The agreement of the International Monetary Fund and the agreement of the International Bank for Reconstruction and Development, collectively known as the Bretton Woods Agreement, were adopted on the basis of the White Plan put forward by Assistant Treasury Secretary White, and the Bretton Woods system began.
Under the Bretton Woods system, the currencies of various countries have a fixed exchange rate system with the US dollar, while the US dollar is linked to gold, and the fixed 1 ounce of gold is $35. With the huge gold stocks accumulated in World War II, the United States ensured that foreign governments could convert surplus dollars into gold at any time. Because the dollar is directly linked to gold, the dollar has won the title of "dollar".
However, in the late 1960s, the American economy was stretched, and gold was continuously lost. The United States began to break its word and become fat. 1971August 15, US President Nixon announced the depreciation of the US dollar and stopped the exchange of US dollars for gold, and the Bretton Woods system began to collapse. Although the major capitalist countries have consulted many times since then, the measures introduced still cannot prevent the deterioration of the US balance of payments deficit and the US dollar crisis. In February 1973, 12, the dollar depreciated again 10%, and the official price of gold increased to 42.22 USD/oz. European countries and other major capitalist countries have withdrawn from the fixed exchange rate system, and the fixed exchange rate system has completely disintegrated, and the exchange rate of the US dollar has become floating. At this point, the dollar no longer has legal gold content. After the floating exchange rate system replaced the fixed exchange rate system, foreign exchange transactions entered the stage of marketization, and then developed into the largest and most active financial market in the world, and it is also the most liquid market in the world today.
Even though the dollar has been separated from gold, it is still the most influential currency among all currencies, and the most important foreign exchange in foreign exchange reserves of various countries is the dollar. In the international market, most goods are priced in dollars. Therefore, in the foreign exchange market, all traders, including the government, will attach great importance to the rise and fall and trend of the US dollar. However, in the foreign exchange market, transactions are conducted between a single currency pair. Although the dollar is strong against some currencies, it may be weak against others. In this case, the best way to measure the overall strength of the dollar is to compile a dollar index with reference to the stock index.
As early as 1973, the Federal Reserve compiled and published the trade-weighted index of major currencies against the US dollar-DTWEXM. The base period of the index is March of that year, and the base period value is = 100. However, in terms of market influence, the US dollar index of the Federal Reserve is far less than the US USDollarIndex(USDX) index compiled and published by ICE(IntercontinentalExchange). USDX, also known as "US dollar exchange rate index", is a comprehensive index to measure the change of US dollar exchange rate in the international foreign exchange market. Usually, the dollar index that everyone refers to in the market is the dollar index of ICE.
The US dollar index of ICE was originally compiled by new york Cotton Exchange (NYCE) at 1985, and the US dollar index futures were introduced. At present, the ownership of US dollar index futures products and exchanges are owned by ICE.
The US dollar index is calculated with reference to the weighted geometric average 1973 of the exchange rate changes of more than a dozen major currencies against the US dollar in March, with 100.00 as the benchmark. After the launch of 1999 10/Euro, the US dollar index was adjusted, and the reference currency was reduced from 1 0 to six major international currencies (Euro, Japanese yen, British pound, Canadian dollar, Swedish kronor and Swiss franc). The calculation formula is as follows:
As can be seen from the formula, the weight of the euro is as high as 57.6%, which can be said to have the greatest impact on the exchange rate of the euro; The Swiss franc has the least influence, with a weight of only 3.6%.
The real-time data of the US dollar index is updated by Reuters every 15 seconds according to the real-time exchange rates of the currencies that make up the US dollar index (see figure 1). The average of the highest bid price and selling price of this currency calculated by Reuters. The calculation results are transmitted to the American Intercontinental Exchange and then distributed to data providers.
Figure1Monthly K-line chart of US dollar index from June 2005 to September 2020
The dollar index reflects the strength of freely convertible currencies between the United States and its major trading currencies. The rise of the US dollar index means that the exchange rate between the US dollar and other currencies has risen, which means that the US dollar has appreciated. Since the major commodities in the world are denominated in dollars, the corresponding commodity prices will fall. The appreciation of the dollar is good for the overall economy of the United States, which will enhance the value of its own currency and increase its purchasing power. But it also affects some industries, such as export. The appreciation of the dollar will increase the price of American exports, thus weakening the competitiveness of American goods in the international market. If the dollar index falls, the opposite is true.