FUNCTIONS AND FEATURES OF CURRENCY MARKET
FUNCTIONS AND FEATURES OF CURRENCY MARKET
The functions performed by the Forex market are:
- Allows the transfer of purchasing power between countries.
- Provides funding to international operations.
- Provides hedging interest rates and exchange rates through instruments traded on it.
Similarly, we note the following main characteristics of the currency market:
- The information can be disseminated quickly, in real time, all acting market (efficiency).
- Homogeneity of the goods: the currency. For this to be true there must be the "law of one price", ie, the same goods are traded at the same price regardless of where the transaction takes place. The mechanism that makes this possible is arbitration.
- High degree of transparency and perfection, a large number of buyers and sellers, approaching the ideal of perfect market.
Participants active in the currency markets can be grouped into direct, including central banks, financial institutions, brokers or brokers of exchange, large international companies and other financial intermediaries are indirect, such as non-financial institutions, investors institutions and individuals.
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