Quoting Currencies

Base CurrencyBase Currency

In a quoted exchange rate, In a quoted exchange rate, currency that is purchased currency that is purchased

with another currencywith another currency

Quoted CurrencyQuoted Currency

In a quoted exchange rate, In a quoted exchange rate, currency with which anothercurrency with which anothercurrency is to be purchasedcurrency is to be purchased

Quoting Currencies

% Change =PO

PN — PO X 100

Indirect Quote =1

Direct Quote

Direct Quote =1

Indirect Quote

Spot RatesSpot Rates

The SpotThe SpotMarketMarket

Buy and Buy and Sell RatesSell Rates

The ForwardMarket

ForwardRates

ForwardContracts

Premiumsand Discounts

Swaps, Options, and Futures

• Currency Swaps

• Currency Options

• Currency Futures Contracts

DeregulationDeregulationof Marketsof Markets

DeregulationDeregulationof Marketsof Markets

InnovationsInnovationsin Technologyin Technology

InnovationsInnovationsin Technologyin Technology

Growth of the ForeignGrowth of the ForeignExchange MarketExchange Market

Growth of the ForeignGrowth of the ForeignExchange MarketExchange Market

Foreign Exchange Market Institutions

• Interbank Market

• Clearing Mechanisms

• Securities Exchanges

• Over-the-Counter Market