These currencies are usually grouped as provided below for ease of identification and reference: The price of a pair of currencies defines the number of units of the quoted curerncy (X$) per unit of the base currency (1€).Ī great variety of currencies are traded in the currency market.The second three letters of the pair always refer to the currency being quoted (USD).The first three letters always refer to the base currency (EUR).For example, the dollar with respect to the euro:
#FOREIGN CURRENCY COMPARE CODE#
To finance international trade, whose transactions represent a significant part of the currency market.Ĭurrencies are identified by a three-letter code ( ISO 4217) and currency pairs are identified by a six-letter code.To favor the exchange of funds between different countries we can find countries with excess liquidity and others that need liquidity.To allow for the realization of currency risk coverage, for example, when investments are made in another currency.That is, to define the number of units of one currency to be handed over in exchange for one unit of a different currency. To set the prices of some currencies with respect to others (currency pairs).The principal functions of the currency market or exchange market are the following: The same commercial transaction can require different solutions over time, depending on the moment at which it takes place and the role of the parties involved (importer or exporter). The trade finance or foreign trade activity accompanies people and businesses in their activity importing/exporting goods and services, mitigating the risks that exist in international commercial relations and simplifying the settlement of operations. The second refers to the exchange of physical notes that takes place in banking institutions or exchange houses, basically to satisfy the needs of people who are travelling to a country whose currency is different from their own (domestic money is exchanged for foreign money). In general, we can differentiate between the currency market and the banknote market the first refers to the market for trades between financial institutions or between financial institutions and companies or institutions (it is also known as the wholesale market). The Japanese yen and the British pound account for 5.4% and 5.6%, respectively. The dollar is followed by the euro, the money in which 24% of the world´s international reserves are denominated. dollar, the currency in which more than 60% of the reserves held by the world´s central banks is denominated. Among them, the most representative is the U.S.
These range from central banks to private individuals, and for the large number of currencies that are traded. The FX market is known for its great variety of participants Among the most important are Tokyo, Singapore, Sidney, Hong Kong, Bahrein, London, Frankfurt, Zurich, New York, Chicago and Toronto. The foreign currency market functions 24 hours a day for 5.5 days a week, opening on Sunday afternoon and closing on Friday, along with the New York market.Īs it is a fundamentally unorganized market, the forex market has a large number of operations centers around the world. Each transaction is closed with a private contract between the parties. Unlike the stock exchanges, which are organized and have a clearing house, the currency market is unregulated, free, and private no institution acts as an intermediary between the parties to guarantee that they comply with the obligations both have acquired. The retail banking area serves individual customers and also receives support from the markets area to design and manage products and manage the associated risks. It is a highly specialized area that seeks to meet institutional and corporate customers’ investment and risk coverage needs. A bank’s markets division, also known as its Treasury, is part of its wholesale banking business.
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