The currency market

The currency market is a system of the stable economic and organizational relations connected with operations of purchase and sale of foreign exchanges and documents of payment in foreign exchanges. The currency market is divided into exchange and off-exchange (interbank). In the currency market the wide sections of operations on the foreign trade accounts, tourism, migration of capitals, insurance of currency costs, diversifications of external reserves and to moving of currency liquidity are carried out, various measures of currency interference are manufactured, purchase and sale, an exchange of the foreigner of currency, checks, bills, the monetary accounts connected with foreign trade, foreign investments, tourism etc. is manufactured.

As main subjects of the currency market large multinational banks, exchanges act. The role of those or other currencies in the currency market is defined by their place in the international economic relations. The currency markets can be free, without currency restrictions and not free where for realisation of operations the corresponding permission and observance of an official rate of exchange is necessary. The world currency market formed through correspondent communications between banks of the different countries, is the mechanism by means of which the international monetary accounts connected with foreign trade, are manufactured by investments, tourism, etc. business and cultural relations. In many countries purchase and sale of foreign exchanges is manufactured also at exchange by brokers and dealers.

On the mode the currency markets are subdivided on free (in the countries where there are no currency restrictions) and not free (where these restrictions are positioned also currency transactions are possible only with the permission of the authorised organisations on official rates). In the countries with currency restrictions quite often there are illegal, "black" currency markets. It is accepted to evolve following large markets: European, North American, Asian. In them evolve the large international monetary centres: in Europe - London, Zurich, Frankfurt am Main, Paris etc.; in the North America - New York; in Asia - Tokyo, Singapore, Hong Kong. It is possible to speak about existence of the national currency markets for which those or other currency restrictions on buying, sale, crediting and realisation of accounts in a foreign exchange are peculiar.

The basic participants of the currency market are:

• Central banks. Their function includes management of the state external reserves and maintenance of stability of the exchange rate. For realisation of these problems can be spent both direct currency interventions, and indirect influence - through level control of the rate of refunding, reservation specifications, etc.
• Business banks. They spend the basic volume of currency transactions. In banks keep bills other market participants and carry out through them conversion for purposes conversion and depozitno-credit operations. In banks cumulative requirements commodity and equity markets in a currency exchange, and also in call for funds/placing concentrate. Besides satisfaction of demands of clients, banks can perform operations and is independent for the bill of internal funds.

The exchange currency market - sector of the financial market on which exchange activity with a foreign exchange is carried out. The interbank currency market - the off-exchange currency market on which purchase and sale of a foreign exchange on the basis of a supply and demand between banks is made.

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