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FOREX MARKET

FOREX MARKET . Exchange Rates. Exchange Rate. The rate at which the currency of one country can be exchanged for the currency of another http://www.exchangerate.com/. FOREX Market. = FE, FX, Foreign Exchange Where $ from one nation is exchanged for $ of another

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FOREX MARKET

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  1. FOREX MARKET Exchange Rates

  2. Exchange Rate • The rate at which the currency of one country can be exchanged for the currency of another • http://www.exchangerate.com/

  3. FOREX Market • = FE, FX, Foreign Exchange • Where $ from one nation is exchanged for $ of another • Over $3.2 trillion exchanged daily • Used to convert $ for imports/exports or for speculation • 24 hour market in major financial hubs- New York, Tokyo, London, Franfort

  4. FOREX Cont’d • When Americans buy imports, they add dollars to the FOREX market (increase supply) and take foreign currency out of the market • This depreciates the dollar since there are now more dollars supplied in the FOREX • The demand for foreign currency goes up

  5. G 5.1 The Foreign Exchange Market Exchange Rates Dollar – Yen Market P Sy Exchange Rate: $.01=¥1 .01 Dollar price of 1 yen Dy Qe Q Quantity of yen

  6. Value of the Dollar • Appreciation- the value of the dollar has increased and one can now buy more foreign goods (Imports rise, exports fall) • Depreciation- the international value of the dollar has decreased and it takes more dollars to buy foreign goods (Imports fall, exports rise)

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