Learning Objectives
       • Explore the multitude of functions of the 
             foreign exchange market
       • Detail how the structure of the global 
             currency market has been changing
       • Describe the financial and operational 
             transactions conducted in the foreign 
             exchange market
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                     Learning Objectives
       • Examine how the size of the global currency 
             market has changed with global economics
       • Learn the forms of currency quotations used 
             by currency dealers, financial institutions, 
             and agents of all kinds when conducting 
             foreign exchange transactions
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                     Functions of the Foreign 
                     Exchange Market
      • The foreign exchange market is the 
            mechanism by which participants:
              – transfer purchasing power between countries;
              – obtain or provide credit for international trade 
                   transactions; and
              – minimize exposure to the risks of exchange rate 
                   changes.
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                     Structure of the Foreign 
                     Exchange Market
       • The global foreign exchange market today is 
             rapidly changing due to:
                – electronic trading platforms;
                – algorithmic trading programs and routines; and 
                – increasing role of currencies as an asset class. 
       • Global trading is a 24-hour-a-day process as 
             shown in Exhibit 5.1
       • When the Asian-based trading centers 
             overlap, the global currency markets exhibit 
             the greatest depth and liquidity.
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                     Exhibit 5.1  Global Currency 
                     Trading: The Trading Day
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