Currency market- a special market on which foreign exchange transactions are carried out, i.e. exchanging the currency of one country for the currency of another country. The main characteristics of the foreign exchange market are the following:

Does not have a specific location;

Global, i.e. allows all operators in all countries to exchange with each other in any convertible currency;

Provides access to national currency markets and the international capital market;

Transactions in this market are carried out in real time; transaction speed does not correspond to settlement speed; never closes (except weekends and holidays), open 24 hours a day.

Well organized, with developed infrastructure and ingrained market customs;

Market participants have a high credit rating, so collateral is usually not required;

Most of the instruments used in the foreign exchange market are highly standardized.

The foreign exchange market performs the following functions:

1. Provides monetary and credit settlement service export-import operations.

2. Conducts foreign exchange transactions related to the investment of capital outside the national economy.

3.Provides hedging opportunities, i.e. insurance of currency risks.

4. Allows for currency speculation, i.e. play on the future price of a currency.

The foreign exchange market can be classified according to several criteria.

According to the area of ​​distribution there are:

World foreign exchange market (FOREX). The global foreign exchange market (Foreign Exchange) is a global market that unites regional and national foreign exchange markets, a powerful financial instrument that makes it possible to make high profits even from minor price fluctuations on the world currency market. Income from foreign exchange transactions on the FOREX market accounts for up to 60% of all income of many banks.

National foreign exchange market. Serves traffic cash flows inside the country. On the national foreign exchange market there is purchase and sale foreign currency through the banking system. The client buys currency from a commercial bank, and the bank purchases currency from foreign banks or market makers. Due to differences in the level of development, each country within its territory can establish rules for the functioning of the domestic foreign exchange market. Most national markets are integrated into global foreign exchange markets.

Regional foreign exchange market. A territorial market in which countries within a given territory have agreed on the operation of uniform rules of the foreign exchange market. The leading reserve currencies and currencies of the countries in the region are traded on these markets.

In relation to foreign exchange restrictions, foreign exchange markets are classified from the point of view of the absence or presence of regulatory impact on the functioning of these markets:

- free foreign exchange market- a market in which there are no currency restrictions. Currency restrictions, as a rule, mean a system of government measures to establish rules of behavior in the foreign exchange market;

- captive foreign exchange market- a market with currency restrictions.

By types of exchange rates, markets are divided into:

A market with one exchange rate regime, i.e. foreign exchange market with free exchange rates (with floating rates), the quotation of which is established at exchange trading;

A dual-mode foreign exchange market is a market with the simultaneous use of fixed and floating exchange rates. The dual currency regime is used by the state as a measure to regulate the movement of capital between the domestic and international capital markets and is introduced with the aim of controlling and, as a rule, limiting the influence of the international capital market on the economy of a given state.

By nature of organization:

- stock exchange market- a market in which foreign exchange transactions are carried out through a foreign exchange exchange;

- over-the-counter foreign exchange market organized by dealers who may or may not be members of the foreign exchange exchange. Dealers connect buyers and sellers through various means of communication.

The main participants in the foreign exchange market are:

Exporters-importers;

Individuals;

Commercial banks;

Central banks;

Currency exchanges;

Brokerage companies;

Investment funds.

Exporters-importers, i.e. organizations engaged in foreign economic activity, participating in international trade, have a steady demand for foreign currency(importers) and foreign exchange supply (exporters). At the same time, these participants in the international foreign exchange market do not have direct access to the market and carry out transactions through the intermediary of commercial banks, actively using a wide range of foreign exchange dealing tools.

Individuals carry out a wide range of non-trading operations in terms of foreign tourism, transfers wages, pensions, royalties, purchase and sale of foreign currency. This is also the largest group conducting currency transactions for speculative purposes.

Commercial banks carry out the volume of transactions on the international foreign exchange market:

Conduct foreign exchange transactions on behalf of exporters-importers;

Act as intermediaries between the parties to the transaction;

Consult their clients;

Engaged in currency speculation;

Diversify their portfolios with foreign assets.

Banks they, as it were, accumulate (through transactions with clients) the total needs of the market for currency conversions, as well as for attracting and placing funds, and reach out to other banks with them. In addition to satisfying customer requests, banks can conduct transactions on their own behalf and at the expense of the bank.

Central banks how state banks conduct foreign exchange interventions to support the exchange rate, regulate the level of interest rates on investments in national currency, how a legal entity - collection of checks, bills, convert income in foreign currency.

Currency exchanges Unlike stock companies, they do not work in a specific building or at certain hours. Thanks to the development of telecommunications technologies, most of the world's leading financial institutions use the services of exchanges directly and through intermediaries around the clock. The world's largest exchanges are the London, New York and Tokyo Currency Exchanges.

Brokerage agencies(companies) conduct foreign exchange transactions on their own behalf on behalf of the client and insure risks. Their functions include bringing together the buyer and seller of foreign currency and carrying out transactions between them conversion operation. The firm's brokers charge a brokerage commission for their intermediation.

Investment funds are represented by various types of international investment, pension, mutual funds, insurance companies and trusts. They implement a policy of diversified asset portfolio management, placing funds in securities of governments and corporations of various countries. Investment funds include such large international corporations that carry out foreign industrial investments (creation of branches, joint ventures etc.), like Xerox, Nestle, General Motors, etc.

Lecture 11. Foreign exchange (forex) market

1. The concept of the foreign exchange market. Main types foreign exchange markets

The international exchange of goods, services and capital requires the implementation of appropriate calculations, the implementation of which requires the exchange of one currency for another. As a result, importers, exporters, investors, trade intermediaries, other businessmen, and tourists are forced to convert both national and foreign currencies for the final settlement of foreign trade relations. Currency trading is carried out on its exchange markets.

The foreign exchange market is a system of economic, organizational and legal relations for transactions of purchase and sale of foreign currencies and payment documents in foreign currencies.

The vast majority monetary assets, sold on the foreign exchange markets, takes the form of demand deposits in the largest banks that trade with each other. Only a small part of the market is cash exchange. It is on the interbank foreign exchange market that the main exchange rate quotes are made.

Depending on the timing of foreign exchange transactions, foreign exchange markets are divided into:

– spot market (market for cash, current or cash foreign exchange transactions);

– forward foreign exchange market.

The spot market is a market for immediate delivery of currency. The traditional deadline for the delivery of currency on the spot market is 2 business days. Transactions, the execution of which exceeds 2 business days, are made on the derivatives (forward) foreign exchange market.

The global foreign exchange market covers the entire globe. Prices change around the clock in this market, and currency trading is carried out all the time. The leading centers of foreign exchange trading in Europe are Zurich, Frankfurt am Main, Paris, London. In the USA - New York, in Asia - Tokyo, Singapore, Bahrain, Abu Dhabi, Qatar.

Global currency trading begins in the morning in Tokyo and Sydney, moves west to Hong Kong and Singapore, passes through Bahrain, moves to major European markets in Frankfurt, Zurich and London, jumps across the Atlantic Ocean to New York and ends in San Francisco and Los Angeles. The market is most active and liquid in the early afternoon European time, when centers in Europe and the East Coast of the United States are open simultaneously.

At the end of the day in California, when stockbrokers in Tokyo and Hong Kong begin their activities, the market is least intense.

National currency markets, serving the movement of cash flows within the country, are integrated into the global foreign exchange market, where foreign exchange transactions and settlements related to the international movement of goods, services and capital are carried out. The global foreign exchange market, operating around the clock from Monday to Friday, links together national currency markets using modern means of communication, such as telephone, fax, and computer networks.

Quotations between banks in different parts of the world are always possible thanks to the existence of an electronic system. Therefore, most banks, in addition to operations on the domestic market, also participate in foreign markets.

Large banks have foreign exchange trading branches in several major markets:

· European banks – in others European countries, USA, Asia;

· American banks – in Europe and Asia;

· Asian banks – in Europe and the USA.

In some countries, such as France, some foreign exchange transactions are carried out on the official trading floor by open offer prices The prices existing at the time of closing are published as official prices for that day.

Foreign exchange markets perform the following functions:

1. Transfer purchasing power(settlement services for export-import transactions, as well as foreign exchange transactions related to the investment of capital outside the national economy).

The need for such a transfer is due to the fact that international trade and capital transactions are usually carried out between business entities located in states that, as a rule, have different national currencies.

Each side would like to eventually have its own currency, although trade or capital transactions can be conducted in any currency they prefer.

For example, a Japanese exporter sells a Toyota car to a Brazilian importer. The former can invoice the latter in Japanese yen, Brazilian cruzeiros and US dollars, with agreement on the type of currency made in advance.

Whatever currency is used, one party must transfer purchasing power to either their national currency, or to a foreign one. If yen is used, the Brazilian importer must transfer his purchasing power from the cruzeiro to the yen to pay for the transaction. If cruzeiros are used, the Japanese exporter must convert the yen into cruzeiros. If US dollars are used, then the Brazilian importer must convert cruzeiros into dollars, and the Japanese exporter must convert dollars into yen.

2. Loan collateral

Since transporting goods from one country to another takes time, a mechanism is needed to finance valuables in transit.

In the case of a Toyota transaction, someone must finance the product while it is in transit either to Brazil or in a Brazilian store before being sold. Usually this is from 5 weeks to 6 months. The Japanese exporter may agree to extend credit, treating the Brazilian importer as a debtor for the loans, with or without interest.

The foreign exchange market can be a source of credit.

For trade financing, there are specialized obligations - bank lending and letters of credit.

3. Hedging

The active mobility of exchange rates, the complexity and gigantic size of foreign exchange markets lead to the risk of foreign exchange losses as a result of fluctuations in exchange rates, which is mitigated by hedging, i.e. systems of measures aimed at minimizing currency risk by acquiring positions that are equivalent in content but opposite in form (for example, swap transactions involving the purchase of currency at the spot rate and its simultaneous sale at the forward rate and vice versa). Since the Cruzeiro, for example, is a volatile currency, neither the Brazilian importer nor the Japanese exporter will want to be exposed to exchange rate risk. They would rather make a normal profit from a car transaction than speculate on financial losses or gains related to exchange rates.

4. Currency speculation

The behavior of foreign exchange market participants who want to get the maximum benefit from a foreign exchange transaction depends on the difference between interest rates in the national and foreign money markets, as well as on expected changes in the exchange rate.

So, if an exporter from Germany, who received foreign exchange earnings in the amount of 100 thousand US dollars, which he will need in 6 months, does not expect any changes in the level of the exchange rate, then he will invest the received amount in American bank, if the interest rate in the US is higher than in Germany, and exchanges US dollars for marks after a 6-month period. If the interest rate is higher in Germany, the exporter will immediately exchange the amount received for marks and invest them in German assets.

If we assume that the level of interest rates in the USA and Germany is the same (for example, 4% on a 6-month deposit), but the depreciation of the German mark is expected from 1.5 marks per dollar to 1.6 marks per dollar, then it is more profitable for the exporter to deposit money to an American bank and exchange them for stamps after 6 months, which will allow him to receive a larger amount - 166.4 thousand marks (1.6 x 1.04 x 100 thousand), instead of 156 thousand marks (1.5 x 1 .04 x 100 thousand).

Thus, general rule for speculative transactions in foreign currency is that their profitability depends on how much the currency will fall in price beyond the difference in interest rates on deposits in domestic and foreign currencies. However, speculative operations will be profitable only if market participants correctly predict expected changes in the exchange rate.

2. Subjects and objects of the foreign exchange market

There are four main categories of entities operating in the foreign exchange market:

1) banks and non-bank dealers trading foreign currency;

2) individuals and firms carrying out commercial and investment transactions;

3) arbitrageurs and speculators;

4) central banks and treasuries.

Banks and non-bank foreign exchange dealers “make the market” in both a technical and organizational sense. They make a profit by buying foreign currency at its real price and reselling it at a slightly higher price, called the "selling price."

Individuals and firms use the foreign exchange market to facilitate the execution of their business and financial transactions. This group consists of exporters, importers, investors of international funds, multinational firms and tourists. Their use of the foreign exchange market is a necessary element of their commercial and investment programs, but is sporadic. Some of these participants use the market to "hedge" (avoiding the risk associated with currency exchange rates).

Speculators and arbitrageurs make profits within the market itself. They operate only in their own interests, without serving customers or ensuring the continuity of the market. For example, arbitrage participants profit from price differences between different markets.

Central banks and treasuries use the market to acquire or dispose of foreign currency reserves; influence the prices at which their own currency is traded. They seek to influence currency exchange rates in ways that serve their country's interests.

Foreign exchange market entities operate in the foreign exchange market, a specific sector of which is the stock (currency) exchange. The main function of the stock (currency) exchange is to identify the real market price of a product (exchange rate), taking into account changes in supply and demand for it. In addition to the main price-determining function, modern exchanges perform other functions:

– comparison of trade and actual demand and supply and identification on this basis of the real exchange rate. Exchange quotations show the agreed ratio of planned and actual demand and supply on the exchange, which allows taking into account all factors influencing the market price;

– hedging. Hedging is used in futures markets to protect against unfavorable price fluctuations (exchange rates);

– forecasting the exchange rate. For forecasting, both fundamental (traditional) economic analysis and a specific method used only on stock exchanges are used - the so-called technical (mechanical) analysis. In practice, a combination of these methods is usually used. Forecasting price changes using the fundamental method is based on the study of supply and demand factors. Fundamental analysis is based on the following principle: any economic factor that reduces the supply or increases the demand for a currency leads to an increase in the exchange rate, and, conversely, any factor that increases the supply or decreases the demand for a currency tends to lead to the accumulation of inventories and a decrease in the exchange rate. course. Technical analysis call forecasting the market situation by studying the dynamics of the exchange rate in the future, using information about past exchange rates, interest rates and other commercial parameters;

– stabilizing function. The process that contributes to the establishment and stabilization of the exchange rate includes the public establishment of the exchange rate at the beginning and end of the exchange day (exchange quotation), the transparency of transactions, limiting daily fluctuations in the exchange rate to the limits established by exchange rules, providing exchange members with information on supply and demand for various currencies. Exchange speculation, which involves playing both to increase and decrease the exchange rate, directly has a decisive influence on the stabilization function of the exchange. Currently, speculation is interpreted as an element that is always present in any economy, where economic decisions accepted under conditions of uncertainty. Speculation in foreign exchange markets leads to a softening of price swings. For example, by purchasing currency at a low exchange rate, speculators help increase demand for it. As demand increases, the price of the currency rises. And, conversely, by selling currency at a high rate, speculators reduce high demand and, consequently, exchange rates. Therefore, speculative activity helps to mitigate sharp fluctuations exchange rates. Thus, the presence of constant supply and demand on the stock exchange, created through the mechanism of stock speculation, contributes to the stabilization of the market and the exchange rate.

The functioning of a modern exchange in a market economy is inextricably linked with developed system government regulation, the purpose of which is to create conditions for exchange activities and provide certain guarantees, first of all, to small savers and medium-sized enterprises.

The objects of the foreign exchange market are understood as foreign exchange transactions and foreign exchange values.

Foreign exchange transactions are a type of activity of the state, enterprises, organizations, banking and other financial and credit institutions for the purchase and sale, settlements and lending of foreign currency.

Foreign exchange transactions are carried out on foreign exchange markets. In accordance with the division of foreign exchange markets into spot (cash, cash, current) and urgent, the corresponding types of foreign exchange transactions are distinguished. Moreover, if cash (cash, current, spot) transactions are carried out on the spot market, i.e. transactions for the purchase and sale of currency, settlements for which are carried out no later than 2 banking days, then on the derivatives foreign exchange market various foreign exchange transactions are carried out with a deadline for execution in more than two banking days (i.e. in the future). Such operations include: operations such as currency forward; currency (financial) futures; currency (pure) option; swap transactions, etc. They all have a similar mechanism for establishing the exchange rate and the final execution of the foreign exchange contract.

The rate used in spot transactions is called spot rate. The spot rate reflects how highly a national currency is valued outside a given country at the time of transactions.

Economic agents can use the services of the derivatives (forward) foreign exchange market. If a participant in the foreign exchange market needs to buy foreign currency after a certain period of time, he can enter into a so-called forward contract to purchase this currency. Forward foreign exchange transactions include forward contracts, futures contracts and foreign exchange options.

Both a forward contract and a futures contract are an agreement between two parties to exchange a fixed amount of currency at a specified date in the future at a pre-agreed (forward) rate. Both contracts are binding. Currency futures were first used in 1972 on the Chicago Foreign Exchange Market. The difference between currency futures and forward transactions is that:

– futures– this is trading in standard contracts;

– a mandatory condition of the futures contract is a security deposit;

– settlements between counterparties on currency futures are carried out through clearing house at a currency exchange, which simultaneously acts as an intermediary between the parties and as a guarantor of the transaction.

The advantage of futures over forwards is its high liquidity and constant quotation on the currency exchange. With the help of futures, exporters have the opportunity to hedge their operations.

Currency option is a contract that gives the right (but not the obligation) to one of the parties to the transaction to buy or sell a certain amount of foreign currency at a fixed price over a certain period of time. The buyer of the option pays a premium to the seller in exchange for his obligation to exercise the above right. Currency options are used when the buyer of the option seeks to insure himself against losses associated with changes in the exchange rate in a certain direction. The risk of losses from changes in exchange rates can be of several types. The peculiarity of an option as an insurance transaction is the risk of the seller of the option, which arises as a result of the transfer of the currency risk of the exporter or investor to him. By incorrectly calculating the option rate, the seller risks incurring losses that will exceed the premium he received. Therefore, the seller of an option always seeks to lower its rate and increase the premium, which may be unacceptable to the buyer.

Currency arbitrage operations are carried out on the derivatives forex market. Currency arbitrage- this is a transaction between banks for the purchase and sale of one foreign currency for another at an agreed rate with calculation on an agreed date in order to make a profit when exchange rates change by international market. Currency arbitrage involves the implementation of at least two opposite operations to buy and sell currencies for the same amount. Banks can carry out currency arbitrage operations on behalf of clients, i.e. enterprise represented by an authorized person (dealer), with a value date of “spot” with the obligatory closure of a position opened on behalf of the client on the value date. In this case, the enterprise cannot buy or sell foreign currency; it gives an order to the bank to buy or sell currency on behalf of the bank. The mandatory terms of the transaction include the opening by the enterprise of a security deposit, the funds from which are used by the bank as compensation for possible losses of the bank when the latter conducts arbitration operations. Banks carry out transactions for a position amount exceeding a certain number of times (20, 25, 30, 40, 50,100) the size of the insurance deposit. The client enters into an agreement with an authorized bank, according to which the bank undertakes, on behalf of the client, at its own expense and on its own behalf, to carry out arbitration operations. At the same time, the bank faces the risk of losses from such transactions. Therefore, the client deposits a certain amount as collateral with this bank. The size of such a deposit is determined based on the amount of transactions concluded by the bank and the leverage provided to the client. If the bank receives a loss from a transaction, the enterprise has obligations to the bank in the amount of this loss, which are covered from the security deposit.

If the bank made a profit from the transaction, then it has obligations to the company in the amount of this profit. The amount received can be credited to the client's security deposit as interest or transferred to any account specified by the client, depending on the terms of the agreement. A prerequisite is that the client instructs the bank to close the open position, since the bank is playing with its own money. If this does not happen, then the bank itself can close the long position with a short one, but at any rate.

There are extremely rare situations on the world market when exchange rates relative to each other change by more than 2%, and it is almost impossible to lose your deposit to a client if you play wisely. If Bank employee(dealer) sees that possible losses due to unfavorable movement of rates may exceed the amount of the security deposit, he can independently, without the client’s instructions, close the position with a loss not exceeding the security deposit amount.

The term exchange rate is made up of the spot rate at the time of the transaction and a premium or discount, that is, a premium or discount, depending on interest rates in this moment. The currency with the higher interest rate will trade in the forward market at a discount to the currency with the lower interest rate. Conversely, a currency with a lower interest rate will sell at a premium to a currency with a higher interest rate in the forward market.

The forward foreign exchange market allows you to both insure currency risks and speculate in currencies.

Currency values ​​are also objects of the foreign exchange market. Their category includes: foreign currency; securities in foreign currency; precious metals and stones in raw and processed form, with the exception of jewelry and household items, as well as scrap of such items.

Foreign currency is used in settlements and also serves as an object of purchase and sale.

Securities are monetary and commodity documents evidencing the property rights of their owners and presented for the exercise of these rights. The main types of securities are shares - certificates of participation in the capital of a joint-stock company, giving the right to receive dividends, and bonds - obligations of the issuers to pay their owners an annual income in the form of a fixed percentage and redeem them upon expiration. Stocks and bonds are bought and sold on stock exchanges and the over-the-counter market.

In addition to shares and bonds, securities include: deposit and savings certificates; bills; checks; bills of lading and other documents issued in accordance with the law in the form of securities.

All securities can be classified according to several criteria:

· by the nature of the relationship between the issuer and the investor:

– equity, confirming the fact of participation of the owner of securities in the capital of the issuer;

– debt, confirming the debt of the issuer to the owner of the securities (bonds, deposit and savings certificates, bills);

– derivative securities – securities that certify the right of their owner to buy or sell other securities (“underlying” the derivative security), for example, options on securities;

· by the nature of the transfer of ownership:

– personal ones, which include the names of the owners among the required details. The transfer of ownership of these securities is associated with maintaining a register of owners (holders of securities);

– bearer securities, the transfer of ownership of which occurs upon transfer of these securities;

– order (intermediate type), the transfer of ownership is formalized by an endorsement on the form of securities;

· by application period:

– perpetual (eternal), the repayment period for which is not provided or is not strictly fixed. These, for example, are shares, as well as debentures a number of European states, also called perpetual annuities;

– long-term – the issue of such securities, as a rule, serves to accumulate financial resources for reconstruction of production or new construction, i.e. aimed at expanded reproduction of fixed capital;

– short-term. Their release is associated, as a rule, with the needs for working capital or with the need to reduce the amount money supply in the country's economy (when issuing securities by the state). The circulation period of short-term securities is no more than one year.

– in other countries, categories of medium-term securities are also distinguished. In this case, long-term securities include securities with a circulation period of more than 7 years; to medium-term – from 1 year to 7 years.

In addition, securities that have a market quote are highlighted. These are securities whose liquidity is high enough that in each period market participants can determine the most typical market price at which the majority of transactions in the market in a given period are concluded.

Gold markets have a close connection with foreign exchange markets. Gold markets are markets in which regular purchase and sale of gold is carried out for industrial consumption (jewelry, medicine, electronics and other industries), for the purpose of gold hoarding, speculation, as well as for the monetary purposes of central banks of various countries (purchase - for the purpose of replenishment official gold reserves, sale - in order to mobilize the necessary foreign exchange resources).

Organizationally, gold markets usually represent a kind of consortium of several banks and specialized firms, which, along with gold trading, purify the precious metal (refining) and produce bullion. Consortium members mediate between buyers and sellers, concentrate purchase and sale orders, and fix the average market price level (daily or several times a day).

There are currently 4 main types of gold markets:

· free international. They are characterized by the absence of any restrictions on the part of official bodies on transactions with gold. Freedom of operations applies to foreign individuals and legal entities. These markets operate in such global financial centers as London, Zurich, Frankfurt am Main, Brussels, Hong Kong, Singapore, Tokyo, etc.;

· free locals. They operate without restrictions only for residents (Paris, Milan, Madrid, Stockholm, Istanbul, Rio de Janeiro, etc.);

· controlled local, which are characterized by the presence of restrictions on transactions with gold for both residents and non-residents (Athens, Cairo);

· “black” are unofficially functioning markets in countries where gold trading is prohibited by law (Bombay, etc.).

Countries where gold is supplemented by the mining of diamonds and other precious stones and their cutting are in an even more advantageous position. However, for both types of jewelry it is important that the costs associated with their extraction do not exceed the world price. Otherwise, the mines have to be closed or modernized, investing large amounts of capital in this.

Precious stones, unlike gold, have never been a monetary commodity. Therefore, a fixed price was not set for them, which set the scale of prices for other goods. Manufacturers of diamonds and other precious stones constantly maintained high monopoly prices, trying to turn the international market for their sales into a “seller” market. This goal is achievable, since there are relatively few deposits containing expensive jewelry stones. This allows the large corporations that own them to unite and dictate prices in accordance with the changing phases of the economic cycle.

While unable to play the role of a universal equivalent, diamonds and other precious stones, however, have a number of extremely important properties for hoarders, who attach great importance to these stones. This is easy convertibility into any currency, reliability as a collateral value and the ability, together with gold, to serve as security for the national currency. The relatively small size and weight of jewelry makes it easier to maintain the security of export-import and collateral transportation.

Official statistics on the precious stones trade have large gaps, which can be explained by a number of reasons. The main one is secrecy, related, among other things, to ensuring security and maintaining prices. In many cases, only estimates of production and sales are possible, but they are not reliable enough. According to a long-standing tradition, a unique division of labor has developed within the diamond complex. Diamond producing countries, with a few exceptions (Russia, India, South Africa), did not cut diamonds or produce products from them, being content with profits from the trade in rough diamonds. The largest producers of large expensive stones - South Africa, Botswana and Namibia - are closely associated with the leading financial and industrial group English-American and operate through its corporation De Beers Consolidated Mines, Ltd., which heads the diamond cartel. It owns mining operations in South Africa and large stakes in Botswana and Namibian companies.

3. Modern tendencies development of the global foreign exchange market

International currency markets are the most important links in the global financial system international economic relations.

The growth of foreign exchange transactions in the world takes place against the backdrop of global changes in the ratio of trade and financial transactions. In the total volume of non-cash payments, the share of payments for transactions in commodity markets was constantly decreasing, while in financial markets it was steadily growing. The majority of payments began to be made in foreign exchange transactions. Their development was determined by the processes of liberalization of national currency markets and the internationalization of the world economy.

National currency markets exist in all countries with developed market economies. As national markets and their mutual connections developed, a single global foreign exchange market emerged. It includes global, regional, national (local) foreign exchange markets. These markets differ in size, the nature of foreign exchange transactions and the number of currencies involved in the transactions. World currency markets are concentrated in global financial centers.

In the early 90s, about half of international currency transactions was carried out on three world currency markets: London, New York, Tokyo.

The leading financial center is London, ranking first in the world in foreign exchange, deposit and credit operations. The daily volume of currency transactions in the English capital alone approaches $500 billion.

The most objective indicator is the share of international financial transactions passing through a financial center. London occupies 31% of the market by this indicator, almost twice as fast as its closest competitor, New York. London is also a leader in terms of the presence of foreign banks. In second place is Tokyo, in third is New York. Finally, London is the largest net exporter of financial services - $8.1 billion (1997). Second place goes to Germany, third place to the USA. Japan closes the list of nine largest financial centers.

Modern foreign exchange markets have the following main features and trends:

– strengthening the internationalization of foreign exchange markets based on the internationalization of economic relations, the widespread use of electronic means of communication and the implementation of transactions and settlements with them;

– unified technology for currency transactions and settlements carried out on correspondent bank accounts;

– distribution of foreign exchange transactions for the purpose of insuring foreign exchange and credit risks;

– speculative and arbitrage transactions, far superior to foreign exchange transactions associated with commercial transactions. The number of their participants has increased sharply and includes not only banks and multinational corporations, but also other legal and individuals;

– instability of exchange rates;

– the predominance of cross-border transactions in the total volume of transactions concluded, which account for from half to three quarters of the daily volume of foreign exchange transactions in the largest centers;

– high concentration of foreign exchange transactions. About 2/3 of transactions are made by banks, 20% by other financial institutions (securities dealer companies, investment, mutual funds etc.) and 16% - for non-financial institutions (including some large speculators). Moreover, for banking sector characterized by a high level of concentration. In the mid-90s, for example, in New York, 70% of the turnover of foreign exchange transactions in the market passed through 20 banks, and in London - 68%.

Foreign exchange markets ensure the prompt implementation of international payments, the interconnection of world foreign exchange markets with credit and financial markets. With the help of foreign exchange markets, foreign exchange reserves of banks, enterprises, and the state are replenished. The mechanism of foreign exchange markets is used for government regulation of the economy, including at the macro level within a group of countries (for example, the EU).

Questions for self-control

2. What is it? functional role foreign exchange (forex) market?

3. The main participants in the foreign exchange market, their goals and economic interests.

4. What explains the need to establish the exchange rate?

5. What are the factors influencing the exchange rate?

6. Concept, types, economic content of currency quotes.

7. Types of exchange rates.

8. Determination of the exchange rate.

9. Concept and basic rules for determining the cross rate.

10. Structure of the foreign exchange market.

11. Concept and rules for determining the forward rate.

12. What are the general and distinctive features forward and futures transactions?

13. What is the main purpose of a currency option?

14. Features of the implementation of currency arbitrage operations.

Basic terms

Foreign exchange market is a system of economic and organizational-legal relations for transactions of purchase and sale of foreign currencies and payment documents in foreign currencies.

Currency quotation is the establishment of the exchange rate of foreign currencies by state and commercial banks, stock exchanges in accordance with the situation on the foreign exchange market, current legislation and established practice.

Currency arbitrage is the purchase and sale of foreign currency, followed by a reverse transaction.

Exchange rate is the price of one country's currency expressed in another country's currency.

A currency option is the right to choose alternative terms of a currency contract.

Currency risk is the danger of foreign exchange losses due to exchange rate fluctuations.

Currency forward – execution of a foreign exchange contract more than two business days after its conclusion at a pre-agreed rate.

A fluctuating exchange rate is an exchange rate that changes freely under the influence of supply and demand.

A cross rate is the relationship between two currencies expressed in terms of a third currency.

Buyer's rate - purchase (buyer's) rate - the price that buyers are willing to pay.

The forward transaction rate is the exchange rate used when performing foreign exchange transactions for a period.

Seller rate – the selling rate (seller) is the lowest price at which the buyer is willing to make a transaction.

The nominal exchange rate is the relative price of the currencies of two countries, or the currency of one country expressed in the monetary units of another country.

Reverse currency quotation is a currency quotation in which a national monetary unit is taken as a unit, the price of which is expressed in a certain amount of foreign currency.

Parity exchange rate is a settlement rate in international payment transactions based on currency parity.

A floating exchange rate is a fluctuating exchange rate that involves linking changes in the market rate with the dynamics of the exchange rates of other countries or a set of currencies.

Direct currency quotation is a currency quotation in which the value of a unit of foreign currency is expressed in national currency.

A spot transaction is a transaction in which currency is sold with immediate execution of the foreign exchange contract.

The spot rate is the exchange price for cash transactions.

The average exchange rate is the arithmetic mean between the buying and selling rates.

The actual exchange rate is the rate at which purchase and sale transactions are carried out.

Fixed exchange rate is an officially established relationship between national currencies, based on currency parities determined by law; involves fixing the content of national monetary units directly in gold or in convertible currency, while strictly limiting fluctuations in market exchange rates.

The foreign exchange market is a special market on which foreign exchange transactions are carried out, i.e. exchange of one country's currency for another country's currency at a specified nominal exchange rate.

The nominal foreign exchange (exchange) rate is the relative price of the currencies of two countries, or the currency of one country expressed in the monetary units of another country. When the term "exchange rate" is used, we are talking about the nominal exchange rate.

Establishing the exchange rate of a national currency in a foreign currency at a given moment is called a foreign exchange quotation. The exchange rate of a national monetary unit can be determined both in the form of a direct quotation, when a foreign currency is taken as a unit (for example, 30 Russian rubles per US dollar), and in the form of a reverse quotation, when a national monetary unit is taken as a unit (reverse quotation is used mainly in UK and a number of currencies in the US). Using a reverse quote allows you to compare the exchange rate of the national currency with foreign currencies on any foreign exchange market.

When the price of a unit of foreign currency in national monetary units increases, we speak of depreciation (cheaper) of the national currency. Conversely, when the price of a unit of foreign currency in national monetary units falls, the national currency is said to be appreciating.

The vast majority of monetary assets traded in foreign exchange markets are in the form of demand deposits with major banks trading with each other. Only a small part of the market is cash exchange. It is on the interbank foreign exchange market that the main exchange rate quotes are made.

National currency markets, serving the movement of cash flows within the country, are integrated into the global foreign exchange market, where foreign exchange transactions and settlements related to the international movement of goods, services and capital are carried out. The global foreign exchange market, operating 24 hours a day from Monday to Friday, links together national foreign exchange markets using modern means of communication.

Participants in the foreign exchange market are central and commercial banks, currency exchanges, brokerage agencies, international corporations.

The main participants in the foreign exchange market are commercial banks, which not only diversify their portfolios with foreign assets, but also carry out foreign exchange transactions on behalf of firms entering foreign markets as exporters and importers. Foreign exchange transactions for the export and import of goods and services of each country form the basis for determining the value of the national currency.

Individual participants in the foreign exchange market, for example, tourists traveling outside their country, also turn to the services of banks and non-banking financial institutions; persons receiving Money transfers from relatives living abroad; private investors investing in foreign economies.

The foreign exchange market, first of all, provides foreign exchange, credit and settlement services for export-import transactions, as well as foreign exchange transactions related to the investment of capital outside the national economy.

In addition, the foreign exchange market provides hedging opportunities, i.e. insurance of currency risks. When hedging, economic agents, wanting to reduce the risk associated with exchange rate fluctuations that may have negative impact on their capital, seek to get rid of net liabilities in foreign currency, i.e. achieve a balance between assets and liabilities in a given currency.

Finally, the foreign exchange market allows for currency speculation, i.e. play on the future price of a currency. The behavior of foreign exchange market participants who want to get the maximum benefit from a foreign exchange transaction depends on the difference between interest rates in the national and foreign money markets, as well as on expected changes in the exchange rate.

Types of foreign exchange markets. One of the largest foreign exchange markets is the spot market, or the market for immediate delivery of currency (within 2 business days).

The modern developed stock market also includes the derivatives market. They received this name because the fulfillment of obligations under them involves the implementation of transactions with other securities, currencies and goods that make up their underlying asset. Such securities market instruments provide the possibility of insurance financial risks. In the derivatives markets, billions of dollars of risk are constantly shifting from those who cannot afford them to those who hope to avoid them. The most well-known derivative financial instruments are derivatives: forward contracts, futures and options.

A forward contract is a contract concluded between two counterparties to a transaction and obliging its owner to carry out (or accept) delivery of goods, the type, quality, quantity of which and delivery conditions are specified in the contract. Moreover, the supply (purchase) of goods is carried out at a certain price at a specified point in time in the future. Forward contracts are traded in the over-the-counter market. A significant risk when concluding a forward contract is the potential dishonesty of one of the counterparties, who may refuse to fulfill their obligations if market conditions change unfavorably for them. Therefore, when concluding forward contracts, you should establish the business reputation and real solvency of your partner. In practice, futures rather than forward contracts are used for insurance purposes.

A futures is a contract obliging its owner to make (or accept) delivery of a commodity of a certain type, quality and quantity at a certain price at a specified point in time in the future. Delivery (receipt) of goods is carried out to the exchange warehouse (from the exchange warehouse). Such a contract can be bought and sold as a security. In addition to commodities, the object of futures contracts can be currencies, financial instruments, including securities, stock indices, etc.

Being standardized, these contracts can change hands many times. A trader who buys a futures contract can then sell it. This allows individuals who are not interested in the physical delivery of the commodity to participate in futures trading, i.e. those market participants who are focused on making speculative profits. The main volume of futures contracts (up to 98% of their turnover) is closed by the purchase of counter contracts and is not brought to the delivery of real goods. Futures contracts are traded on the exchange market.

An option is a contract that gives its owner the right to buy or sell a commodity (such as a security) at a specified price within a specified time. An option is a standardized exchange contract and is therefore a speculative trading instrument. At the same time, for option owners interested in redeeming them, this instrument is a way of insurance.

There are other types of derivative financial instruments, which include warrants (a security that gives its owner the right to purchase a certain number of shares on a certain future date at a certain price. Warrants are usually used for a new issue of securities. The warrant is traded as a security, whose price reflects the value of the underlying securities).

World, regional, national (local) foreign exchange markets differ depending on the volume, nature of foreign exchange transactions, the number of currencies used and the degree of liberalization.

Modern world currency markets are characterized by the following main features:

1. Internationalization of foreign exchange markets based on the internationalization of economic relations, the widespread use of electronic means of communication and the implementation of transactions and settlements on them.
2. Operations are carried out continuously throughout the day, alternately in all parts of the world.
3. The technology of foreign exchange transactions is unified; settlements are carried out using correspondent accounts of banks.
4. Widespread development of foreign exchange transactions to insure currency and credit risks. At the same time, previously practiced foreign exchange transactions reflected in bank balances, are replaced by forward and other currency transactions, which are accounted for off-balance sheet items.
5. Speculative and arbitrage transactions far exceed foreign exchange transactions associated with commercial transactions; the number of their participants has increased sharply and includes not only banks and TNCs, but also other legal entities and even individuals.
6. Instability of currencies, the rate of which, like a kind of exchange commodity, often has its own trends that do not depend on fundamental economic factors. The global foreign exchange market is the most powerful and liquid, but extremely sensitive to economic and political news.

World currency markets are concentrated in global financial centers. Among them, the currency markets in London, New York, Frankfurt am Main, Paris, Zurich, Tokyo, and Singapore stand out. In global foreign exchange markets, banks conduct transactions with currencies that are widely used in global payment transactions, and almost never make transactions with currencies of regional and local significance, regardless of their status and reliability.

As a result of the integration process in Western Europe, an international (regional) European currency market was formed, settlements on which in 1979-1998. were carried out in the ECU. Since January 1999, a new stage in the development of the European foreign exchange market began, in which settlements began to be carried out in euros.

Regional and local foreign exchange markets deal with certain convertible currencies. These include the Singapore dollar, Saudi riyal, Kuwaiti dinar, etc. The quotation of currencies used for foreign exchange transactions in a certain region is relatively regularly carried out by banks in this region, and of local currencies - by banks for which this currency is national and is actively used in transactions with local clientele.

Foreign exchange market of Russia

The foreign exchange market is a significant financial space in which the purchase and sale of currencies and securities in foreign currency takes place, depending on existing supply and demand. Basic concepts of this financial market- the concepts of “currency” and “exchange rate”.

Currency [from it. valuta - price, value] is the monetary unit of a certain state (national monetary equivalent) and banknotes foreign countries, as well as credit and payment documents (bills of exchange, checks, banknotes, etc.), expressed in foreign monetary units and used in international payments (foreign currency).

Exchange rate is the price at which the currency of one country is sold or purchased, expressed in the currency of another country. The success of operations of commercial banks depends on the effectiveness of transactions with currency and the difference in exchange rates, which ultimately affects positive or negative changes in national economy.

According to experts, in connection with the aggravation of foreign economic relations of the Russian Federation with a number of countries, the main feature of our time can be called “the speed of development economic processes related to the policy of pressure on Russia.” In this situation, problems with lending and payments may arise, especially for those companies whose activities are related to foreign exchange transactions. The main task of economists is currently to forecast the scenario for the development of Russia’s foreign economic relations with players in the international foreign exchange market and determine ways for the development of the foreign exchange market of the Russian Federation.

The relevance of such a study is that, based on its results, it will be possible to formulate recommendations for the development of effective measures to protect the national currency, which will ultimately lead to the strengthening of the economic system of the Russian Federation and stabilization in times of crisis.

The purpose of this research is to determine the features of the development of the foreign exchange market of the Russian Federation and changes in the exchange rate of the ruble in the context of modern foreign economic relations of the Russian Federation.

Tasks:

Characterize the functioning of the foreign exchange market of the Russian Federation: identify participants, types banking operations in the foreign exchange market, conditions for conducting foreign exchange transactions;
- outline the features of the development of the foreign exchange market of the Russian Federation; - characterize changes in the exchange rates of the world's leading currencies in relation to the ruble; provide short-term forecasts of these changes.

Key figures in the foreign exchange market are commercial banks, importers (pay for arriving goods in foreign currency), exporters (receive currency for arriving goods and convert them into the monetary equivalent of the national currency), portfolio investors (buy and sell foreign stocks and bonds), foreign exchange brokers (perform trading operations with currency according to the client’s order), dealers (carry out speculative transactions with currency due to exchange rate differences); traders (market makers of the foreign exchange market).

Banking operations with foreign currency are:

Service foreign currency accounts clients;
- establishing correspondent relations with Russian authorized and foreign banks;
- international payments for export and import of goods and services;
- trading operations with foreign currency on the domestic foreign exchange market;
- attraction and placement of currency in the Russian Federation;
- credit operations on international money markets; deposit and conversion transactions in international money markets.

A prerequisite for banks to carry out transactions with currency is compliance with current legislation, the main document being Federal Law No. 173 FZ “On Currency Regulation and Currency Control”. It protects the Russian ruble in the context of the parallel use of freely convertible currencies of other countries. The CBR also regularly issues binding regulations.

Foreign exchange markets are classified according to a set of characteristics:

Sphere of circulation (international, domestic or national foreign exchange market); - attitude to currency restrictions (free market - without restrictions; captive market - with currency restrictions);
- types of exchange rates applied (single-regime market; dual-regime market);
- degree of organization (exchange foreign exchange market; over-the-counter foreign exchange market).

Trading on the foreign exchange market of the Russian Federation is carried out mainly through the system of currency exchanges: Moscow (MICEX), St. Petersburg (SPbVB), Siberian and Asia-Pacific interbank currency exchanges, Ural regional currency exchange, Rostov and Nizhny Novgorod currency and stock exchanges, Samara, foreign exchange interbank exchange".

Main statistical indicators of the foreign exchange market:

1. Indicators of supply and demand: the number of applications for trading operations with currency; volume of applications for trading operations with currency, etc.
2. Currency turnover indicators: total number of transactions (in physical units, in currency units and in rubles); volume of transactions with certain types; turnover indices, etc.
3. Indicators business activity: volume of currency transactions; number of forward transactions; percentage of spot and forward transactions, etc.
4. Price indicators: transaction price (rubles/unit of currency) on a specific date; average price transactions for a specific period; price indices; average price deviation.

The process of forming the level of exchange rates is defined as a currency quote.

In the Russian Federation, the following rates are determined at the place of quotation:

Exchange (managed floating course, carried out by the Central Bank);
- over-the-counter interbank foreign exchange market: the trading volume is greater than the exchange market, there is more freedom for competition, the influence of the Central Bank is not so strong. At these rates, transactions are carried out in non-cash form;
- exchange rate cash currency: State regulation least.

Based on these rates, the government determines the official exchange rates. In the Russian Federation, official rates are determined by the Central Bank for accounting for expenses and revenues of the state budget, payment and settlement operations of the state with citizens and legal entities, taxation and accounting purposes.

Purchasing power parity (PPP) of currencies is a rate that is calculated taking into account the purchasing power of two currencies, which fixes the volume of currencies of both countries with which it is possible to buy an equal amount of goods. A fixed exchange rate and high inflation lead to the devaluation of the currency, the price of which decreases, and the price of foreign ones increases, while domestic goods become cheaper and foreign goods become more expensive.

The exchange rate is influenced by factors such as:

Trade balance (if exports predominate in the country’s foreign trade, there is an excess inflow of foreign currency, which causes an increase in demand for the national currency and an increase exchange rate given currency);
- interest rates (a high interest rate increases the attractiveness rating of a certain currency as an investment instrument; on the international foreign exchange market, the demand for such a currency increases, its exchange rate rises);
- GDP (the more intensively the GDP grows, the more the national currency strengthens; the permissible change in indicators is up to 3% per year; in the case of higher indicators, a reverse reaction develops);
- inflation (a rapid increase in prices in one country in comparison with another causes a depreciation of the currency of the original country for it in accordance with PPP);
- actions of central banks;
- the amount of money supply (an excess supply of one currency will cause its excess supply in the international monetary space and will lead to a decrease in its exchange rate compared to other currencies). It can be argued that the exchange rate is “a means of internationalizing monetary relations, comparing national price structures and production results, national and international values, redistribution national product between countries";
- factors of international relations between countries, as well as the economic situation of countries on the world stage.

According to the decision of the Central Bank of the Russian Federation, the bi-currency basket became the operational benchmark for determining the real exchange rate of the ruble. Within the framework of this study, the characteristics of changes in the exchange rate of the ruble against the US and EU currencies (euro) are of interest.

During its existence, the Russian foreign exchange market has occasionally demonstrated its instability, causing devaluation of the ruble. In this regard, the study of patterns influencing the formation of the exchange rate becomes a very important theoretical and practical point.

World foreign exchange market

The monetary system can be viewed from two sides: on the one hand, it is an objective reality that arises with the deepening economic ties between countries; on the other hand, this objective reality is recognized and enshrined in legal norms, institutions, and international agreements.

The national currency system is a form of organization of a country's currency relations, determined by its currency legislation. The features of the national currency system are determined by the conditions and level of development of the country’s economy, its foreign economic relations, and objectives social policy.

The International Monetary System (IMS) is a form of organization of currency relations within the framework of the world economy, legally established by interstate agreements. The main task of the IMF is to regulate the sphere of international payments and foreign exchange markets to ensure sustainable economic growth, curbing inflation, maintaining balance in foreign economic exchange and payment turnover.

A regional currency system can be created within the framework of the IMF. An example is the European Monetary System, which served as a transitional step towards the formation of a monetary union of countries belonging to the European Union.

MVS is a dynamically developing system. The direction of the evolution of the international economic system is determined by the leading trends in the transformation of the economies of Western countries, changes in the conditions and needs of the world economy as a whole.

In its development, the IMF went through four stages, each of which corresponds to its own type of organization of international monetary relations:

Parisian currency system since 1867 - gold coin standard.
Genoese currency system since 1922 - gold exchange standard.
Bretton Woods monetary system from 1976-1978. - gold exchange standard.
Jamaican currency system from 1976-1978. - SDR standard.

International currency market

The international exchange of goods, services and capital involves the foreign exchange market in its orbit. Importers exchange national currency for the currency of the country where they buy goods and services. Exporters, in turn, having received export proceeds in foreign currency, sell it in exchange for national currency. Investors, investing capital in the economy of a particular country, feel the need for its currency.

The market in which international transactions with currencies take place is called the international (world) foreign exchange market. The foreign exchange market is a special market in which foreign exchange transactions are carried out, that is, the exchange of the currency of one country for the currency of another country at a certain exchange rate.

The most comprehensive data on the world foreign exchange market is collected and compiled by the Bank for International Settlements (BIS) as part of its triennial surveys of the world foreign exchange market, conducted with the assistance of central banks. financial derivatives.

The prerequisites for the formation of world markets for currencies, loans, and securities are:

Concentration of capital in production and banking;
internationalization of economic relations;
development of interbank telecommunications.

Foreign exchange markets represent a set of organizational and economic relations regarding the purchase and sale of payment documents expressed in foreign currency, the currency itself and the investment of foreign currency capital. In terms of the volume, nature of foreign exchange transactions, and the number of currencies involved in transactions, foreign exchange markets are divided into national, regional and global.

National currency markets serve the movement of cash flows within the country and communication with world currency centers. Regional currency markets emerge in the wake of integration (for example, the European currency market). World currency markets are concentrated in global financial centers. Here transactions are carried out with currencies that are widely used in global payment transactions, and almost no transactions are made with currencies of regional and local significance, regardless of their status and reliability. More than half of international foreign exchange transactions were concentrated in three world currency markets: London - 30% of the volume of transactions, New York - 16%, Tokyo - 10%. The global foreign exchange market serves the movement of cash flows, mediating the intercountry movement of goods, services, and the redistribution of capital.

Currently, as a result of the development of communication technology and the removal of currency restrictions, the separation of national, regional and world markets has become largely conditional. A global foreign exchange market is emerging, which operates 24 hours a day alternately in all parts of the world. It was called the “International Currency Exchange” - FOREX. Its daily turnover is 1.2-1.4 trillion. Doll.

Foreign exchange markets perform the following tasks:

They create conditions for the exchange of national money, provide communication between a huge number of separate national systems;
establish an effective exchange rate;
serve as a source of short-term foreign currency loans and foreign currency liquidity management;
create conditions for the management of foreign exchange and credit risks, for carrying out speculative and arbitrage operations.

The main participants in foreign exchange markets are transnational banks operating at two levels. In the retail market, they deal with customers: exporters and importers, foreign lenders and investors, foreign consignees and tourists, etc. The wholesale market is represented by the relationships of banks among themselves and with central banks of issue, which are another important participant in foreign exchange markets. Other participants include TNCs, which mainly carry out transactions through commercial banks and currency exchanges. An intermediary in foreign exchange markets is a foreign exchange broker who connects the seller and buyer of currency. The activities of brokerage firms are mainly related to clients of commercial banks. In relations with foreign correspondent banks, banks often communicate directly with each other.

World currencies. Exchange rate

The international exchange of goods, services and capital involves the foreign exchange market in its orbit. Importers exchange national currency for the currency of the country where they buy goods and services. Exporters, in turn, having received export proceeds in foreign currency, sell it in exchange for national currency.

The exchange rate has a great influence on many macroeconomic processes occurring in society. From the level of the exchange rate, which is used to compare prices for goods and services produced in different countries ah, the competitiveness of national goods on world markets, the volumes of exports and imports, and, consequently, the state of the balance of current transactions depend.

The exchange rate affects the direction of international capital flows. The decision to invest national capital in the assets of a particular country is made based on the expected real return on invested capital, which depends on the interest rate and expected changes in the exchange rate.

The exchange rate, along with the interest rate, itself acts as the price of the asset. In the presence of developed financial markets, the current value of an asset that is expected to be received in the future is determined by discounting it future value in accordance with the interest rate and the expected level of the exchange rate. The dynamics of the exchange rate, the degree and frequency of its fluctuations are the economic and political stability of society.

The exchange rate is an object of macroeconomic policy. With its help, the balance of payments is often settled. The exchange rate plays an important role in the development and implementation of monetary policy, since maintaining a certain level of the exchange rate may require the use of official foreign exchange reserves, which will inevitably affect the supply of money in the economy. In countries with transition economy When implementing stabilization programs, the exchange rate can be used as a “nominal anchor” in the fight against high inflation or hyperinflation.

The nominal exchange rate is the relative price of the currencies of two countries, or the currency of one country expressed in the monetary units of another country. When the term "exchange rate" is used, we are talking about the nominal exchange rate. Establishing the exchange rate of a national currency in a foreign currency at a given moment is called a foreign exchange quotation. There are two types of quotes - direct and indirect.

The existing exchange rate of two currencies approximately corresponds to the ratio of their purchasing powers at a given time, that is, you can buy approximately the same amount of goods and services. It follows that the exchange rate expresses the purchasing power parity of national currencies.

Forms of currency trading on the international foreign exchange market

Traditionally, the foreign exchange market is divided into spot transactions, as well as currency derivatives - direct forwards, swaps, futures and options. Spot exchange transactions between two currencies based on simple standardized contracts with settlements within up to two business days. Direct forwards are structurally close to spot transactions for the exchange of two currencies based on contracts that provide for settlements after more than two business days.

The only difference between currency forwards and spot transactions is that the parties agree on the rate at which they are willing to exchange currencies today, whereas in a forward transaction, the parties agree on the rate at which they will exchange currencies at some point in the future. Accordingly, the difference between the actual exchange rate determined within the forward contract constitutes the profit or loss of one party.

The settlement process is the same as in the spot market. The terms of forward contracts are usually one week, one month, three months, six months and one year. Currently, most forwards are concluded for a short period; forwards for a year are very rare. If the forward rate is below the spot rate, then the foreign currency is sold at a forward discount; if the forward rate is above the spot rate, then the foreign currency is sold at a forward premium.

Forward markup discounts are usually expressed as a percentage per year relative to the spot rate using the formula:

Premium/Discount = Eforward-Espot/Espot n*100,
where E is the exchange rate, respectively, the forward and spot rates. The coefficient n shows the number of periods until payment is due and thereby converts the interest to an annualized rate.

Swaps are transactions that are structurally close to spot transactions, providing for the exchange of a certain amount of two currencies and the reverse exchange of the same amount of currencies at an agreed date in the future. Within forward transactions, approximately 85% are foreign exchange swaps, which are used primarily to hedge foreign exchange risks.

Futures are standardized forward currency contracts traded on exchanges. Futures, which are the same as forwards but traded in the form of standardized contracts for specific amounts of currency on organized exchanges, appeared in 1972. The size of the contract is limited by the rules of a specific exchange, trading occurs with delivery on strictly defined days of the year, the exchange imposes restrictions on the scale of changes in the exchange rate. The currency futures market is developing only in a few cities such as Chicago, New York, London and Singapore. A futures contract is typically smaller in size than a forward contract and carries higher commissions.

Options are a contract that gives the buyer, for a specified fee, the right, which is not his obligation, to buy or sell a currency on a specified date at a fixed price based on a standard contract. Options are standard contracts, half the size of standard futures contracts, that give the buyer the right to buy or sell a specified amount of a currency on a specified day (European option) or at any time before a specific day (American option) at a fixed price. Thus, the buyer of the option has a choice: either buy it or not buy it, while the seller is obliged to sell the option upon the first request of the buyer. For this, the buyer pays the seller a premium of 1-5% of the contract value. Options are also used for the purposes of currency speculation: if the buyer purchases a currency at a price that is much lower than the prevailing market price, he, even minus the option price, ends up winning in relation to the seller.

The main point of commercial trading on the world market, which is carried out largely in the form of spot transactions, is the desire of participants to profit from differences in exchange rates in geographical areas. different currencies nal centers, the so-called arbitration.

An arbitrage operation that involves the purchase of a currency or other asset (commodity, securities) on one market, its immediate sale on another market and making a profit due to the difference in the purchase price and the sale price. Arbitration equalizes supply and demand for currency and therefore helps eliminate, for some time, differences in exchange rates between geographically different markets, uniting national currency markets into a single global one.

The high mobility of exchange rates, the complexity and enormous size of the foreign exchange market have led to the emergence of a specific group of risks that must be taken into account in international operations.

Currency risks are a group of risks arising in connection with the use of several currencies in international transactions. Currency risks are divided into two groups: risks associated with changes in the future exchange rate, and risks associated with settlements. Since arbitration involves the purchase of one currency and its immediate sale on another market, no risk other than the risk of failure to clear settlements arises. The situation is different with all other forms of currency trading on the world market, where there is a risk of changes in the exchange rate during the implementation of a specific transaction. Such risks are neutralized through hedging.

Hedging is compensatory actions taken by a buyer or seller in the foreign exchange market to protect their future income from changes in the exchange rate.

Structure of the world foreign exchange market

The size of the currency trading market is incomparable and exceeds by an order of magnitude all other forms of international economic relations, such as trade in goods, trade in services, international capital movements, work force or technology. Approximately 41% of all currency transactions are spot transactions, 53% are forwards and swaps, and about 6% are futures and options, with the share of swaps gradually decreasing, direct forwards and swaps increasing, and futures and options continuing to remain a small segment of the market.

Transactions in the foreign exchange market can be carried out both by partners within the country and by partners located in different countries. Transactions within a country account for approximately 47% of all currency transactions, with the share of the domestic market gradually increasing, while transactions in currencies between countries account for approximately 53% and their share in global foreign exchange turnover is slightly declining. However, behind the average indicators lies great diversity. For example, in Bahrain, international foreign exchange transactions absolutely dominate local ones, accounting for 91%, while in Japan, foreign exchange transactions account for only 9% of the foreign exchange market turnover, with the remaining foreign exchange transactions taking place between banks within the country.

Geographically, the foreign exchange market is highly concentrated. Three cities (London, New York and Tokyo) account for 55% of global currency trading, with London absolutely dominant with a 30% share, and the market's growth rate greatly exceeds all other currency centers. Currency trading turnover in these three cities ranges from $161 billion to $464 billion per day. The next group includes Singapore, Hong Kong, Zurich and Frankfurt, where daily turnover amounts to $76-105 billion. Within each country, currency trading is also highly concentrated - on average, 11% of financial institutions carry out 75% of currency trading. In London, the share of the 10 largest banks in this business is 44%, in New York - 47, in Tokyo - 51%. Foreign banks play an active role in the foreign exchange markets: in London they account for 79% of currency trading, in Tokyo - 49%, in New York - 46%.

International currency market

The international currency market is the largest financial market in the world, which is a unified system of financial and economic relations aimed at promptly carrying out transactions for the purchase and sale and exchange of currency units from different countries of the world.

The international foreign exchange market is designated by the abbreviation FOREX - “Foreign Exchange Operation”, which can be translated into Russian as “currency conversion operations”. To compare the scale of the foreign exchange market, it should be noted that the capitalization of the US stock market is approximately 3 times lower than the capital turnover that occurs daily on the Forex market.

Formation of the foreign exchange market

The foreign exchange market has gained its popularity and its current structural form since the 70s, when all world currencies moved away from fixed exchange rates in favor of floating ones. Since then, speculators have appeared on the market who have the opportunity to make money on exchange rate differences between currencies. Until this time, the currencies of all countries of the world were pegged to the dollar, and now the main factor in the exchange rate of currency quotes is the balance of supply and demand, which is influenced by the main driving forces of the country’s economy - indicators of internal gross product, industrial development, volumes of imports and exports, turnover of the country’s currency in domestic and foreign markets, inflation and unemployment levels, lending interest rates, reserves commodity and sources of mining, the degree of development of various sectors of the economy, etc.

The main assets of the international foreign exchange market are traditionally the currencies of the economically dominant countries of the world: dollar (USA); euro (EU), pound sterling (UK); yen (Japan); franc (Switzerland). The foreign exchange market is not similar to other types of financial platforms. In fact, the market in the traditional sense does not exist, unlike stock markets, which are based on the work of special exchange platforms. In the international foreign exchange market, all financial transactions are carried out on the basis of computer and telephone networks, through which hundreds of thousands of intermediaries are connected around the world - brokers, banks, exchanges, dealing centers, etc. Thanks to this architecture, the international foreign exchange market operates 24 hours a day, 5 days a week - trading begins with the New Zealand Exchange, after which, in accordance with time, it moves to the Asian, European and American markets.

Functions and capabilities of the international foreign exchange market:

Possibility of conducting timely international settlements.
Providing mechanisms to protect credit and foreign currency deposits.
The possibility of making a profit on currency speculation due to changes in exchange rates.
Operational interrelation of financial, credit and currency institutions of different countries of the world.
Providing mechanisms for diversifying deposits of international banks, government reserves, and international companies.
Fair regulation of exchange rates between currencies of different countries based on the real balance of supply and demand.

Composition of foreign exchange market participants

The range of persons who are allowed to take part in international currency trading is very wide - from international banks to private traders. Fortunately, for each of them it is possible to select suitable conditions: deposit volume; leverage; minimum lot; commission; spread, etc.

Leverage is a key factor providing access to Forex for a wide variety of organizations and individual traders with various capital. At the same time, margin trading allows you to operate on the market with funds that significantly exceed the real amount of the trader’s capital.

Traders from any part of the world can trade immediately after the currency market opens, and there is also the ability to place pending orders. The 24-hour operation of the Forex market is its huge advantage in comparison with similar financial markets. Every day, the total turnover of foreign exchange transactions is more than 3 trillion. dollars. And the incredible vibrancy of the foreign exchange market ensures high liquidity of any currency.

Main participants of the foreign exchange market

State banks - manage the foreign exchange reserves of their country, purchase the currencies of economically dominant countries to diversify and replenish foreign exchange reserves, and stabilize their own currency through interventions.

Commercial banks - perform conversion operations for clients and replenish their own reserves. They also carry out speculative operations in financial markets to generate profits.

International companies - conduct transactions with the purchase, sale and exchange of currencies to pay for the import/export of their products. Often, companies of this type do not have direct access to the FOREX market, so they carry out their operations through commercial banks.

Insurance and investment companies, hedge and pension funds– use the foreign exchange market to hedge and diversify personal as well as invested Money.

Currency exchanges are divisions of state exchanges that provide access to the foreign exchange market for brokers and private traders, and also regulate the exchange rate of the national currency on behalf of government institutions.

Brokers provide private traders with access to stock quotes and provide the opportunity to conduct transactions on the market, for which they charge a brokerage commission.

Private traders are legal entities or individuals who carry out transactions in the financial market through a brokerage company or a commercial bank with the aim of making a profit on speculation or purchasing foreign currency for personal purposes.

Currency and financial market

Financial market - a special form monetary transactions, where the object of purchase and sale is the available funds of business entities, the state and the population. It is an institution that communicates between lenders and borrowers by borrowing funds from lenders and providing them to borrowers.

This is an organized system for trading financial instruments.

Elements of financial market structure:

The loan capital market is a system of relations that ensure the accumulation of temporarily free financial resources and their redistribution between enterprises and investors;
- the securities market is a regulator of the money supply. Carries out the entire complex of capital movements in the economy;
- insurance market - a set of redistributive relations between participants through contributions to a target insurance fund intended to compensate for damage;
- foreign exchange market - the sphere of economic relations for the purchase and sale of foreign currency and payment documents.

The foreign exchange market is a market in which goods are objects that have currency value. Currency values ​​include: foreign currency (banknotes and funds in accounts in monetary units of a foreign state, international or settlement monetary units);

Securities (checks, bills), stock values ​​(stocks, bonds) and other debt obligations denominated in foreign currency;
- precious metals (gold, silver, platinum, palladium, iridium, rhodium, ruthenium, osmium) and natural precious stones (diamonds, rubies, emeralds, sapphires, alexandrites, pearls).

The subjects (participants) of the foreign exchange market are: banks, exchanges, exporters and importers, financial and investment institutions, government organizations.

The object of the foreign exchange market (to whom the actions of the subject are directed) is any financial requirement indicated in currency values. Objects of the foreign exchange market are bought and sold by subjects of the foreign exchange market for money in circulation.

Banks in the foreign exchange market

Foreign exchange market is a market for the purchase and sale of foreign currencies and payment documents in foreign currency.

Currency is banknotes in circulation and funds in bank accounts and bank deposits. Currency can be of two types: national and foreign. In Russia, the national currency is banknotes in the form of banknotes and coins of the Bank of Russia. Foreign currency includes banknotes in the form of banknotes, treasury notes and coins that are in circulation and are legal means of cash payment in the territory of the relevant state (group of states), funds in bank accounts and deposits in monetary units of foreign states, international or settlement money units. Foreign currency and foreign securities (foreign currency securities issued abroad) represent currency values.

The foreign exchange market performs the following functions:

Serves the international circulation of goods, capital, services;
is an instrument of state monetary policy;
forms exchange rates;
protects against currency risks.

The foreign exchange market can be of two types: exchange and over-the-counter (interbank).

Foreign exchange market participants are classified according to the following criteria:

Nationality and location;
institutional participants and their clients.

In accordance with the global criterion, residents are distinguished - individuals and legal entities with permanent residence in Russia, Foreign citizens and stateless persons permanently residing in our country on the basis of a residence permit, as well as representative offices and branches of residents outside Russian Federation; non-residents – individuals and legal entities with a permanent location outside of Russia and operating in accordance with the laws of foreign states.

Institutional participants include authorized banks, exchanges and other financial institutions.

The Russian stock market is represented by currency exchanges, the leading role among which is played by the Moscow Exchange, formed as a result of the merger of the Moscow Interbank Currency Exchange (MICEX) and the RTS, as well as the St. Petersburg Currency Exchange (SPICE).

The over-the-counter market is, in fact, an interbank market, since all purchase and sale transactions of foreign currency can be carried out only through authorized banks that have a special license from the Bank of Russia to conduct foreign exchange transactions.

During interbank transactions, exchange rates are formed.

Exchange rate is the price of a monetary unit of one country, expressed in monetary units of other countries or international currency units (euro). The exchange rate provides a connection between national currencies and their comparison during various currency transactions.

Depending on their stability, there are three types of currencies:

Solid – convertible, i.e. freely exchangeable for any other currency (dollar, english pound sterling, Japanese yen, euro);
soft – partially convertible, including the ruble, i.e. exchangeable only for certain foreign currencies;
closed – non-convertible, i.e. operating 15 within a given country.

We list the factors affecting exchange rates:

1) foreign exchange market conditions - changes in the ratio of supply and demand for a particular currency due to fluctuations in business activity, political events, rumors, speculative transactions, etc.;
2) structural (long-term) factors determined by the competitiveness of national products on world markets, growth (decrease) in GDP and demand for imports, inflation rate, etc.;
3) national monetary policy - a set of measures in the field of international relations, given in the forms:
discount (accounting) policy - influencing the exchange rate through the purchase of bills;
the motto is the use of various means of payment in foreign currency in order to influence the stability of the national currency (one of the methods is currency interventions of the Central Bank of the Russian Federation);
currency regulation and foreign exchange control.

Modern Russian monetary policy dates back to the late 1980s, when the monopoly was abolished foreign trade and the currency monopoly of the state. Nowadays, it is aimed at stabilizing the exchange rate of the Russian ruble against major foreign currencies.

Its central link is the exchange rate policy, changes in which characterize the stages of formation of the Russian foreign exchange market:

1) free market, the ruble exchange rate is determined by the influence of supply and demand on the currency exchange (MICEX);
2) expansion of the number of market participants and the volume of transactions; the rate is formed based on the results of daily trading on the MICEX.
The Central Bank of the Russian Federation influences the exchange rate by conducting currency interventions (selling foreign currency in order to bring down the exchange rate of foreign currency and maintain the ruble); later, the Central Bank of the Russian Federation tried to change the amplitude of short-term fluctuations in the exchange rate. Commercial banks are active participants in the foreign exchange market;
3) the introduction of a “currency corridor” - a method of regulating the exchange rate by fixing its lower and upper levels. The restrictions were set for a year;
4) a new exchange rate policy, characterized by a transition to determining medium-term guidelines for the dynamics of the national currency exchange rate.
After the crisis and devaluation of the ruble, the Central Bank of the Russian Federation began to introduce a floating exchange rate regime;
5) liberalization monetary policy. Almost all currency restrictions were abolished. The share of non-residents in the total capital of Russian banks has sharply increased;
6) the period before the crisis was characterized by the strengthening of the ruble and the liberalization of the state’s foreign exchange policy. The Russian foreign exchange market was growing at a very high rate.

In the context of the development of the global financial crisis, the volatility (variability) of exchange rates and, as a consequence, the speculativeness of foreign exchange transactions sharply increased. The Bank of Russia intensified its stabilizing functions by conducting currency interventions. The main volume of foreign exchange transactions in conditions of financial instability is carried out on organized markets. In the Russian foreign exchange market, banks are the main participants. They account for more than 70% of all transactions.

Currency regulation and exchange control in Russia are carried out on the basis of Law No. 173-FZ and Federal Law No. 115-FZ “On combating the legalization (laundering) of proceeds from crime and the financing of terrorism” (hereinafter referred to as Law No. 115-FZ).

The Law on Currency Regulation and Currency Control defines the principles of currency transactions, the powers and functions of currency regulation and control bodies, ownership rights to currency assets, and liability for violation of currency legislation.

The currency regulation authorities are the Bank of Russia and the Government of the Russian Federation. The Russian government is also the main controller of foreign exchange transactions.

Currency control bodies are the Bank of Russia, federal executive authorities authorized by the Government of the Russian Federation.

Currency control agents are authorized banks reporting to the Central Bank of the Russian Federation, professional securities market participants reporting to the federal executive body for the securities market, and territorial bodies reporting to currency control bodies - representatives of the executive branch. Law No. 173-F3 (Article 23) establishes the rights and obligations of currency control authorities and agents and their officials.

The scope of currency regulation includes transactions carried out between residents and between residents and non-residents. Current foreign exchange transactions between residents and non-residents are carried out without restrictions. For operations related to the movement of capital (their list is established by law), a reservation of funds and a special account regime are provided. All foreign exchange earnings received by residents from foreign trade activities are transferred to the resident’s bank account in an authorized bank.

Russian citizens and legal entities have the right, without restrictions, to open accounts in foreign currency in banks of member states of the OECD (Organization for Economic Co-operation and Development) and countries participating in the fight against money laundering of proceeds from crime (FATF).

In accordance with Law No. 115-FZ, credit institutions are obliged to:

Identify the person who carries out transactions subject to mandatory control;
document and submit to the authorized body information on transactions with funds or other property.

Violation of the requirements of the Law by banks may result in the revocation of the license to carry out banking operations in the manner provided for by law RF.

Authorized banks carry out foreign exchange transactions in accordance with federal laws and regulatory documents of the Bank of Russia. Of fundamental importance is Bank of Russia Instruction No. 124-I “On establishing the size (limits) of open currency positions, the methodology for their calculation and the specifics of supervising their compliance by credit institutions.” The purpose of establishing an OCP limit is to reduce currency risk.

Currency position (CP) is the balance of funds in foreign currencies: balance sheet assets and liabilities, off-balance sheet claims and liabilities in the corresponding currencies or precious metal, providing the bank with additional income or expenses when currency exchange rates change. VP arises on the date of conclusion of a transaction for the purchase or sale of foreign currencies. Net currency position is the difference between the sum of balance sheet assets and liabilities in the same foreign currency (precious metal).

The currency position can be:

Closed – a currency position in a separate foreign currency for which assets and liabilities (claims and obligations) are quantitatively the same;
open - the difference in balances of funds in foreign currencies, which form quantitatively non-matching assets and liabilities in individual currencies;
short open – liabilities in a certain foreign currency quantitatively exceed assets in this currency;
long open – assets in a certain foreign currency quantitatively exceed liabilities in this currency.

Positions in a purchased currency are called long, and positions in a sold currency are called short and are designated “+” and “-”, respectively. Thus, a bank that buys US dollars for Russian rubles opens long dollar and short ruble currency positions. A bank that sells dollars and borrows rubles opens a long ruble and a short dollar currency position.

Limits on open currency positions (LOVI) are quantitative restrictions established by the Bank of Russia on the ratio of total open currency positions and own funds(capital) of authorized banks.

Currently, the ORP limit is 10% equity.

LOVP - long and short currency positions are converted for each currency into the ruble equivalent at the official rate of the Bank of Russia, then separately summed up. Open position in rubles is determined by calculation as a balancing item.

If the OCP limit was set at 30% of the bank's capital, and the OP was 20%, the bank could make further currency purchases within 10% of the capital.

If the bank were to exceed the OVP limit, for example by 10%, it would be obliged to close it by selling the excess amount of foreign currency in the amount of 10% of capital.

Foreign exchange market analysis

When analyzing the Forex currency market, it can be noted that in order to ensure constant and stable development of all areas of the economy, the state carries out analysis and regulation of the foreign exchange market and full control over the current level of inflation. A high level of inflation leads to the inevitable depreciation of the entire national currency on the market. A moderate level of currency has a positive impact on all production sectors, while the absence of inflation reduces the consumption of goods social production, with everyone negative consequences for the country's economy.

The state can influence the economic situation and the foreign exchange market by analyzing and using methods of taxation, administrative laws, budget regulation, monetary policy and protectionist policies.

As for traders analyzing the foreign exchange market, it is monetary policy that is of utmost interest to them. The implementation of monetary policy within the country is carried out by the “Central Bank”. His main responsibilities include: maintaining the stability and balance of the national currency in the market, as well as the ratio of its exchange value to economic development. Being the leading link of the entire Central Banking System, he analyzes and regulates currency liquidity, carries out compensation settlements with all banks and performs the duties of a correspondent with all Central Banks of other countries. In addition, to ensure that the currency level remains stable, the bank regulates the currency on the foreign market.

A trader analyzing the foreign exchange market needs to know what stages the implementation of monetary policy consists of.

So, the implementation of monetary policy when analyzing the foreign exchange market consists of the following stages:

Changing the norm of required reserves;
recalculation of the refinancing discount rate (in percent);
actions on the open foreign exchange market.

Currency traders and analysts in market analysis, Special attention pay attention to changes in major interest rates in all countries. An increase in interest rates in the country provides support for the entire national currency. Basically, main question regarding fundamental analysis and analysis of the stock and foreign exchange market, this is - what will happen to the % rate?

Decisions regarding interest rates are announced following meetings of Central Banks. The main reasons for any decision on the rate are included in the accompanying documents, in addition, the head of the Central Bank can comment on the same decision at a general press conference. Information of this kind is very valuable for analysts and traders analyzing the foreign exchange market.

A decision is made on the interest rate, taking into account many macroeconomic indicators. But there are 2 most important factors foreign exchange market analysis: inflation and economic growth.

On the one hand, the level of the base interest rate should be higher in order not to provoke a high increase in inflation in any country, and on the other hand, it should not be too low to have a positive impact on economic growth. Therefore, the bank must maintain a balance between these two currency factors in the foreign exchange market.

During the global currency crisis, the central banks of leading countries, analyzing the situation, reduce interest rates, thereby stimulating the growth of the country's economy. During a period of stable development of the world economy and the foreign exchange market, the Central Bank focuses on inflation control.

Foreign exchange market participants

Commercial banks;
- currency exchanges;
- central banks;
- companies carrying out foreign trade operations;
- investment funds;
- brokerage companies;
- private individuals.

Commercial banks. Conduct the bulk of foreign exchange transactions. Other market participants hold accounts in banks and carry out the necessary conversion transactions with them. Banks, as it were, accumulate (through transactions with clients) the total needs of the market for currency conversions, as well as for attracting and placing funds, and reach out to other banks with them. In addition to satisfying customer requests, banks can conduct operations independently using their own funds.

Ultimately, the foreign exchange market is a market for interbank transactions, and when speaking about the movement of exchange rates, one should keep in mind the interbank foreign exchange market. International banks have the greatest influence on global currency markets, with daily transaction volumes reaching billions of dollars. These are banks such as Barclays Bank, Citibank, Chase Manhattan Bank, Deutsche Bank, Swiss Bank Corporation, Union Bank of Switzerland and others.

Currency exchanges. Unlike stock exchanges and term currency exchanges, currency exchanges do not operate in a specific building or at specific hours. Thanks to the development of telecommunications technologies, most leading financial institutions around the world use the services of exchanges directly and through intermediaries around the clock. The world's largest exchanges are the London, New York and Tokyo Currency Exchanges.

In a number of countries with economies in transition, currency exchanges operate, the functions of which include the exchange of currencies for legal entities and the formation of market exchange rates. The state usually actively regulates the level of the exchange rate, taking advantage of the compactness of the exchange market.

Central banks. Their function includes managing foreign exchange reserves, conducting foreign exchange interventions that affect the level of the exchange rate, as well as regulating the level of interest rates on investments in the national currency.

The US central bank, the Federal Reserve System (US Federal Reserve or FED), has the greatest influence on world currency markets. It is followed by the central banks of Germany - the Bundesbank (Deutsche Bundesbank or BUBA) and the UK (Bank of England, also called Old Lady).

Firms engaged in foreign trade operations Companies involved in international trade have a steady demand for foreign currency (importers) and a supply of foreign currency (exporters). At the same time, these organizations, as a rule, do not have direct access to foreign exchange markets and conduct conversion and deposit operations through commercial banks.

Investment funds. These companies, represented by various types of international investment, pension, mutual funds, insurance companies and trusts, implement a policy of diversified asset portfolio management, placing funds in securities of governments and corporations of various countries. The most famous fund is "Quantum"; George Soros, conducting successful currency speculation.

TO this species Firms also include large international corporations making foreign industrial investments: creating branches, joint ventures, etc., such as Xerox, Nestle, General Motors and others.

Brokerage companies. Their function is to bring together the buyer and seller of foreign currency and carry out a conversion operation between them. For their intermediation, brokerage firms charge a brokerage commission. In Forex there is usually no commission that is a percentage of the transaction amount or a pre-agreed specified amount. As a rule, brokerage company dealers quote currencies with a spread that already includes their commission.

The brokerage firm, which has information about the requested rates, is the place where the real exchange rate for already concluded transactions is formed. Commercial banks receive information about the current exchange rate from brokerage firms.

Among the brokerage companies in the international currency markets, the most famous are Lasser Marshall, Harlow Butler, Tullett and Tokio, Coutts, Tradition and others.

Private individuals. Individuals carry out a wide range of non-trading transactions in terms of foreign tourism, transfers of wages, pensions, royalties, purchase and sale of foreign currency. This is also the largest group conducting currency transactions for speculative purposes.

Domestic foreign exchange market

The domestic foreign exchange market is the foreign exchange market of one state, i.e. market operating within a given country. The domestic foreign exchange market consists of domestic regional markets. These include foreign exchange markets centered on interbank foreign exchange exchanges.

The purchase and sale of foreign currency and checks, the nominal value of which is indicated in foreign currency, in the Russian Federation is carried out only through authorized banks. The Central Bank of the Russian Federation establishes requirements for credit institutions for the preparation of documents for the purchase and sale of cash foreign currency and checks (including travel checks), the nominal value of which is indicated in foreign currency. The requirement for personal identification when purchasing and selling by individuals cash foreign currency and checks, the nominal value of which is indicated in foreign currency, cannot be established, except in cases provided for by federal laws.

The procedure for the purchase and sale of foreign currency and checks, the nominal value of which is indicated in foreign currency, by residents who are not individuals and non-residents may provide for the following requirements:

1. on the use of special accounts for the reservation by residents of an amount not exceeding the equivalent of 100% of the amount of the purchased currency for a period of no more than 60 calendar days before the date of the currency purchase;
2. reservation by non-residents of an amount not exceeding the equivalent of 20% of the amount of currency being sold for a period of no more than a year.

The requirements for the use of a special account and for reservations do not apply when making purchases and sales of foreign currency and related checks by authorized banks and individuals not for the purpose of their entrepreneurial activity.

Such requirements also do not apply if the reservation condition has already been established in connection with the implementation of a foreign exchange transaction, for which the purchase and sale of foreign currency and checks is carried out.

Residents open, without restrictions, accounts in foreign currency in banks located in the territories of foreign countries that are members of the Organization for Economic Co-operation and Development (OECD) or the Financial Action Task Force (FATF). No later than a month from the date of conclusion (termination) of an agreement on opening an account with a bank located outside the territory of the Russian Federation, residents are required to notify tax authorities at the place of its registration on opening (closing) accounts. In other cases, residents open accounts in banks outside the territory of the Russian Federation in the manner established by the Central Bank of the Russian Federation, which may provide for preliminary registration of the account being opened.

Residents have the right to transfer to their accounts opened in banks outside the territory of the Russian Federation, funds from their accounts in authorized banks or their other accounts opened in banks outside the territory of the Russian Federation. Resident legal entities have the right to carry out currency transactions without restrictions with funds credited to accounts opened in banks outside the territory of the Russian Federation, with the exception of transactions between residents.

Resident individuals have the right, without restrictions, to carry out currency transactions not related to the transfer of property and the provision of services on the territory of the Russian Federation, using funds credited to accounts opened in banks outside the territory of the Russian Federation.

Non-residents have the right to open bank accounts in foreign currency and the currency of the Russian Federation on the territory of the Russian Federation only in authorized banks, the procedure for opening and maintaining them on the territory of the Russian Federation, including special accounts, is established by the Central Bank of the Russian Federation.

Without restrictions, non-residents have the right to transfer foreign currency and the currency of the Russian Federation from their bank accounts in banks outside the territory of the Russian Federation to their accounts and deposits in authorized banks and foreign currency from their bank accounts in authorized banks to their accounts in banks outside the Russian Federation.

In relation to foreign exchange restrictions, free and non-free foreign exchange markets can be distinguished. Currency restrictions are a system of government measures (administrative, legislative, economic, organizational) to establish the procedure for conducting transactions with currency values. Currency restrictions include measures for targeted regulation of payments and transfers of national and foreign currency abroad.

According to the types of exchange rates used, the foreign exchange market can be with a single regime and with a double regime.

A single-mode market is a foreign exchange market with floating exchange rates, the quotation of which is established at exchange trading.

A dual regime foreign exchange market is a market with simultaneous use of fixed and floating exchange rates. The introduction of a dual currency market is used by the state as a measure to regulate the movement of capital between the national and international loan capital markets. This measure is intended to limit and control the influence of the international loan capital market on the economy of a given state.

Depending on the degree of organization, the foreign exchange market can be either exchange or over-the-counter.

The exchange foreign exchange market is an organized market, which is represented by a foreign exchange exchange, it is the cheapest source of currency and foreign exchange funds; applications submitted for exchange trading have absolute liquidity.

A foreign exchange exchange is an enterprise that organizes trading in currencies and securities in foreign currency. Its main function is not to obtain high profits, but to mobilize temporarily free funds through the sale of currency and securities in foreign currency and to set the exchange rate.

The over-the-counter foreign exchange market is organized by dealers who may or may not be members of the foreign exchange exchange and conduct it by telephone, fax, and computer networks.

The exchange and over-the-counter markets to a certain extent contradict each other and complement each other. This is due to the fact that, while performing the general function of currency trading and circulation of securities in foreign currency, they use various methods and forms of selling currency and securities in foreign currency.

The advantages of the over-the-counter foreign exchange market are:

The low cost of currency exchange transactions is sufficient. Bank dealers often use face-to-face currency auctions on the exchange to reduce their own costs for currency conversion by concluding currency purchase and sale agreements at the exchange rate before the start of trading on the exchange. On the exchange, commissions are charged to trading participants, the amount of which is directly dependent on the amount of foreign currency and ruble resources sold. In addition, the law establishes a tax on stock exchange transactions. In the over-the-counter market, for an authorized bank, after a counterparty to a transaction has been found, the currency conversion operation is carried out practically free of charge;
higher speed of settlements than when trading on the foreign exchange exchange. This is due, first of all, to the fact that the over-the-counter foreign exchange market allows transactions to be carried out throughout the entire trading day, and not at a strictly defined time of the exchange session.

Regulation of the foreign exchange market

The foreign exchange market, like the entire market economy, does not function on its own, but under the influence of market and government regulation. Market currency regulation is subject to the laws of value, supply and demand. The effect of these laws in conditions of competition in the foreign exchange market ensures the relative equivalence of currency exchange, compliance with international financial flows the needs of the world economy related to the movement of goods, services, capital, and loans. Through the price mechanism and signals of exchange rate dynamics, market participants learn about the demands of currency buyers and the possibilities of their supply. Equalizing supply and demand in the foreign exchange market is a special case of the theory of equilibrium prices for competitive markets, known to us from the course of economic theory (microeconomics). Let's illustrate this using traditional supply and demand curves.

The market regulation of the foreign exchange market described above was effective before the abolition of the gold standard, while the mechanism of gold points operated as a spontaneous regulator of the foreign exchange market. After the abolition of the gold standard, state currency regulation arose. It should not be seen as an alternative to market regulation. Market regulation is not replaced by government regulation. They complement each other. The first, based on competition, generates incentives for development, and the second is aimed at overcoming shortcomings market regulation currency relations. The boundary between the market and the state as two regulators of currency relations is very fluid and changes frequently.

In conditions of crisis shocks, wars, and post-war economic recovery, state currency regulation prevails, sometimes very strict. As the monetary and economic situation improves, foreign exchange transactions are liberalized and market competition in this area is encouraged. But the state always maintains foreign exchange control for the purpose of regulation and supervision of foreign exchange relations.

Globalization introduces new aspects into government regulation of foreign exchange markets. At the national level, it is aimed at increasing the competitiveness of national businesses. Interstate regulation is carried out in the interests of the largest transnational businesses. Under these conditions, contradictions between the interests of national and global currency regulation are inevitable.

The organizational form of government regulation is currency policy, which in each country also takes legal form in the form of currency legislation. Therefore, state currency regulation simultaneously acts as a set of activities carried out by the state in the field of currency relations in accordance with the current regulations of the country, and as a set of legal norms regulating the procedure for carrying out transactions with currency values ​​in the country and abroad.

Modern currency regulation is a synthesis, a combination of market and government regulation. At the monetary policy level, it always looks like a debate between currency protectionism and currency liberalization. The main trend of modern currency regulation has been the liberalization of currency relations in foreign exchange markets, which is expressed, first of all, in the desire of most countries to abolish currency restrictions. But foreign exchange regulation is not synonymous with foreign exchange restrictions. The latter represent only part of foreign exchange regulation. As currency restrictions are gradually lifted, currency regulation does not disappear.

In addition to the previously discussed currency restrictions, currency regulation includes:

Discount (accounting) policy;
motto policy;
diversification of foreign exchange reserves;
regulation of the degree of currency convertibility and exchange rate regime;
devaluation and revaluation.

Let us briefly characterize the listed elements of currency regulation. Discount policy is a change in the central bank discount rate. By lowering the discount rate, the central bank counts on the outflow of national and foreign capital in order to reduce the active balance of the balance of payments and depreciate the exchange rate of its currency.

An increase in the discount rate can stimulate capital inflows from countries with lower interest rates. The effectiveness of discount policy is low in modern conditions, since the movement of capital today is influenced not only by the interest rate. In addition, in the context of economic globalization, central banks are forced to take into account the dynamics of discount rates in other countries.

Motto policy is a method of influencing the exchange rate of the national currency through the purchase and sale of foreign currency. The monetary policy is carried out most often in the form of foreign exchange interventions by central banks at the expense of gold and foreign exchange reserves or short-term mutual loans from central banks.

Diversification of foreign exchange reserves is a change in the structure of foreign exchange reserves by including different currencies in their composition in order to ensure international payments and protection against foreign exchange losses. Typically, diversification occurs by selling unstable and buying more stable currencies.

Devaluation is a decrease in the exchange rate of the national currency in relation to foreign currencies or international currency units. Revaluation is an increase in the exchange rate of the national currency in relation to foreign currencies or international currency units. These terms in the modern sense are interpreted much more broadly. For example, the term “devaluation” now means a relatively long-term and significant decline in the market exchange rate of a currency.

Development of the foreign exchange market

Why does a trader need to know the stages of development of the foreign exchange market? In order to better understand the principle of its operation - knowing history, you can predict further development The Forex market, like other financial markets, see new perspectives. The trader also learns to better understand the logic of others’ actions major players(banks, funds, etc.), which means he can analyze the reasons for the movement of certain financial instruments, is better at fundamental analysis, etc.

Historians believe that the first metal money (coins) were created in Ancient Egypt, and already in the Middle Ages money was exchanged everywhere, moneylenders flourished, etc. The development of navigation, international trade and the desire to earn more stimulated the activity of Italian money changers. As we can see, currency speculation was already quite popular back then. Little by little, the foreign exchange market began to take on clearer contours. Today, the Internet has brought the process of exchanging money to a whole new level, allowing you to trade from home or office.

Initially, exchange rates were fixed: for a US dollar you could buy a certain amount of yuan, etc. Later, the exchange rate of each currency was determined in a certain amount of gold, that is, it was provided by the country’s gold reserves. Later world economy switched to a floating exchange rate, which allowed traders (traders, currency speculators) to make money on the difference in rates.

Traditionally, the date of “birth” of the currency exchange is considered to be 1971, when fixed exchange rates were abolished in different countries (states). Forex (FOREX - Foreign Exchange market, i.e., currency exchange market) was formed, where money could be earned by buying currency cheaper and selling it after it had risen in price.

Later some financiers large countries Attempts were made to revive the previous fixed-rate system, but without success. Over the next 10-20 years, the Forex exchange has grown significantly, increased trading volumes (and continues to increase) and transformed thanks to technology, primarily the Internet.

More than 4-5 trillion US dollars are traded on the Forex market per day. Large funds, banks, investors, as well as many private traders with small deposits (up to $10,000) speculate on this market. The group of private traders is the largest, but at the same time has minimal influence on the market due to the fact that it operates small amounts- compared to any big bank, For example.

The goals of players (market participants) may differ. If the bank simply wants to exchange the dollar for the euro or the British pound for Swiss frank, then a private trader primarily aims to make a profit from the exchange.

Banks and funds also have their own analytical departments, whose responsibilities include analyzing the current market situation and profitable currency exchange.

Profession currency trader is becoming more and more in demand. Every day more and more people of different ages, genders and professions want to learn how to make money with their minds. The new profession allows you to do this in minimum terms. Yes, at first you will have to give your best, learning new knowledge and practicing on demo and cent accounts. But the invested effort and time pays off many times over - as soon as you get your first profit, you will see that everything is real, trading will go much easier. People are tired of bosses, reporting and low salaries. They want to earn a decent profit while sitting at home or in the office, at a time convenient for them.

Downside medals are passion, greed and reluctance to study steadily. Many people lack simple persistence in learning, so they leave trading after the first failures. But those who set a goal and move towards it will achieve it sooner or later.

Foreign exchange credit market

The credit market is an integral part of the financial market, where the movement of loan capital (credit) takes place between borrowers and lenders on the terms of repayment, payment and urgency. The credit market has all the characteristics of a market as an economic phenomenon.

Main characteristics of the credit market:

Market characteristics	Characteristics of the credit market
1. Availability of a product produced for sale
2. Main function of the market	2. Purchase and sale of loans on the credit market
3. Market participants	3. Lenders, borrowers (debtors) and intermediaries (banks, financial organizations and etc.)
4. Price of goods and services	4. The price of a loan is a percentage determined based on the law of supply and demand for a loan
5. Market regulation	5. Self-regulation of the credit market and regulation by national regulators

The object of purchase and sale in the credit market is borrowed (loan) capital (credit) attracted from abroad or loaned to legal entities and individuals of foreign countries. The subjects (participants) of the credit market are legal entities (banks, companies, transnational corporations, central banks, exchanges, financial, investment and pension funds, savings and loan institutions, etc.), as well as individuals.

From a functional point of view, the credit market is a system of market relations that ensures the accumulation and redistribution of loans between market participants (lenders, borrowers and intermediaries) for the purpose of continuity and profitability of the reproduction process.

The modern credit market exists with late XIX V. After World War II, the international credit market developed slowly, predominantly as a short-term lending market (up to one year) with a trend toward expanding demand for medium- and long-term loans (up to 15 years). Subsequently, the growth rate of the credit market increased, and currently its total annual volume (national and international markets) is more than 2 trillion. US dollars.

Over the almost 170-year history of its existence, the credit market has acquired a number of features:

1. The credit market has the effect of a credit multiplier - a coefficient reflecting the relationship between deposits and increase credit operations by creating interbank deposits.
2. The credit market does not have clear spatial and temporal boundaries. It operates continuously, taking into account changes in time zones in order to find optimal conditions for the purchase and sale of loans.
3. The institutional feature of the credit market is that it is a set of credit and financial institutions through which the purchase and sale of loans is carried out. Such institutions include private firms and banks (in the context of globalization, these are transnational corporations - TNCs and transnational banks - TNB), stock exchanges, state-owned enterprises, central banks, government and municipal bodies, international financial institutions.
4. The credit market uses the currencies of leading countries and international currency units. The global credit market is dominated by the US dollar, euro, and yen.
5. A feature of the credit market is its versatility. It carries out credit, settlement, currency, guarantee, consulting and other operations.
6. The credit market is characterized by simplified, standardized procedures for making transactions using the latest computer technologies.

In the credit market, credit goods are presented in various forms. They can be classified as follows.

Classification of loans in the credit market:

Classification sign	Loan forms
1. According to sources	Internal; foreign (external); mixed
2. As intended	Commercial (branded); financial; "intermediate"
3. By type	Commodity (export); foreign exchange (banking)
4. By loan currency	In the currency of the debtor country; in the currency of the creditor country; in the currency of a third country; in collective currencies (euros)
5. By timing	Short-term (up to 1 year); medium-term (1-5 years); long-term (over 5-7 years)
6. By provision	Secured; blank (unsecured)
7. According to the delivery technique	Financial (cash); acceptance; certificates of deposit; bond; consortial

Some positions in the table require additional explanation, in particular paragraph 6, which classifies loans secured by collateral. The collateral is usually goods, titles of title and other commercial documents, securities, bills of exchange, transport and insurance certificates, real estate and other valuables. Obviously, the lender prefers to take as collateral goods that have great sales potential, and when determining the amount of collateral, takes into account the situation in the commodity market.

The credit market is a sector of the financial market. It is interconnected and interacts with the foreign exchange, stock, insurance and investment sectors of the financial market.

The economic essence of the credit market is manifested in the following functions:

1) redistribution;
2) savings in distribution costs;
3) emissions;
4) regulation;
5) control.

The credit market moves money capital and material values between individuals and legal entities. In order for capital to “flow” from production to the sphere of circulation, the state must stimulate the attraction of credit resources into production. Applying for a loan to ensure the required amount working capital, enterprises accelerate capital turnover and reduce overall costs.

The credit market is displacing cash, replacing it with non-cash credit instruments: checks, bills and credit cards. At the same time, money turnover accelerates.

The regulatory function of the credit market is manifested at the macroeconomic level in the spontaneous redistribution of released resources between enterprises, industries and territories. Enterprises gain the opportunity to expand production and earn additional profits. To this end, they are implementing scientific developments and innovative technologies. Thus, it accelerates scientific and technical progress.

Lenders, trying to ensure timely and full repayment of the loan with interest, monitor the condition of the borrower, his activities and solvency.

Participants in the credit market are subjects and objects of credit relations. The subjects of the credit market include the lender and the borrower. They are interested in joint activities. By making a loan and remaining the owner, the lender controls its application to ensure that it is repaid at a profit. The borrower temporarily becomes the owner of the capital received and seeks to use it to generate additional profit, ensuring the repayment of the loan with interest. Subjects of the credit market can be individuals and legal entities registered in this or other states, as well as the states themselves. In the credit market, lenders are sellers and borrowers are buyers. Credit relations act as goods. The object of the credit market is the loaned value, provided as capital by its owner on the terms of repayment, payment and urgency. In the credit market, in intense competition, profit is divided into business income and loan interest: lenders are interested in increasing interest at the expense of business income, and entrepreneurial borrowers are interested in the opposite.

National foreign exchange market

The national (domestic) foreign exchange market is the market of one state. They exist in all countries with developed market economies. Currency exchange operations are carried out only in this country.

The national foreign exchange market is understood as the entire set of operations carried out by banks located on the territory of a given country for foreign exchange services to their clients, which may include companies, individuals, banks that do not specialize in international foreign exchange transactions, as well as their own foreign exchange transactions.

In countries with restrictive foreign exchange laws, the official foreign exchange market is usually complemented by a black market (illegal market) and a gray market (in which banks transact in non-convertible currencies).

National currency markets ensure the movement of cash flows within the country and maintain communication with world currency centers. The degree of involvement of national markets in the operations of the world foreign exchange market depends on the degree of integration of the country’s economy into the world economy, on the state of its monetary and credit system and taxation system, the level of foreign exchange control and foreign exchange regulation (the degree of freedom of action of non-residents in the national currency and stock markets), the stability of the country's political system and, finally, its convenient geographical location.

Economics of foreign exchange markets

Economic transactions between participants in international relations are impossible without the exchange of one national currency for another.

The exchange rate is the proportion in which the currency of one country is exchanged for the currency of another, or the price of one foreign monetary unit expressed in the national currency of another country. The objective basis of such a “price” of money is the purchasing power of one currency compared to another. Currencies with greater purchasing power are “stronger” than others.

Fixing the exchange rate of a national currency in a foreign one is called a foreign exchange quotation. There are two methods of currency quotation:

Direct quotation, when the rate of a unit of foreign currency is expressed in national currency (1, 10, 100 units of foreign currency = X units of national currency);
- indirect - reverse quotation, when a national monetary unit is taken as a unit, the rate of which is expressed in a certain amount of foreign currency (1,10,100 units of national currency = X units of foreign currency). In most countries, when setting the exchange rate of the national currency, a direct quote is used, in the UK - a reverse quote, and in the USA both quotes are used.

For professional participants in foreign exchange markets, the concept of “exchange rate” simply does not exist. Most foreign exchange markets use a quotation procedure called fixing - this is the determination of the interbank rate by sequentially comparing supply and demand for each currency. Buyer's rates and seller's rates are then set on this basis.

The buyer's rate is the rate at which the bank buys foreign currency for national currency, and the seller's rate is the rate at which it sells foreign currency for national currency. The seller's rate is higher than the buyer's rate in a direct quote.

The difference between the buyer's rate and the seller's rate is called the mirage. It is obvious that any bank is interested in the lowest possible buyer's rate and the highest possible seller's rate, and only fierce competition for the client forces banks to act in the opposite direction. Reducing margins and attracting customers allows you to win a lot of profits.

In addition to the seller's rate and the buyer's rate, there are other types of exchange rates depending on various criteria for their determination.

The real exchange rate shows the relative level of prices. An increase in the real exchange rate reflects that prices for foreign goods in rubles exceed prices for similar goods produced domestically. The real exchange rate depreciates. Other than that equal conditions this leads to increased competitiveness of national products, since such goods become cheaper than foreign ones. Conversely, a decrease in the real exchange rate means an increase in the real exchange rate and leads to a loss of competitiveness of domestic goods.

Payment documents denominated in various currencies are bought and sold on a special market - the foreign exchange market. The foreign exchange market is the totality of all relations that arise between the subjects of foreign exchange transactions. From an institutional point of view, the foreign exchange market consists of many large commercial banks and other financial institutions connected to each other by a complex network of modern communication means through which currencies are traded. In this sense, the foreign exchange market is not a specific gathering place for sellers and buyers of currencies.

The overwhelming majority of foreign exchange transactions are carried out in non-cash form, i.e., through current and fixed-term bank accounts, and only a small part of the market is accounted for by coin trading and cash exchange. In a number of countries, part of the interbank market is institutionalized in the form of a currency exchange, where representatives of the Central Bank meet with participants in the foreign exchange market. A foreign exchange exchange is usually a non-profit enterprise, since its main task is not to obtain high profits, but to organize currency trading and mobilize temporarily free foreign exchange resources.

Supply and demand in the national foreign exchange market are formed as a result of the collision of monetary claims and obligations, expressed in different currencies, mediating the international exchange of goods, services and capital movements, while all other transactions that mediate international exchange are taken into account and are reflected in the balance of payments of any countries.

Factors influencing the demand and supply of currency may include:

New information about important economic events in the country and abroad;
- rational expectations of a large number of operators influenced by the behavior of the largest players in the foreign exchange market;
- events of an economic and political nature, as a result of which restrictions may be introduced on the foreign exchange market.

The demand for foreign currency also depends on relative level income. With an increase in income in a country compared to other countries that export goods to a given country, residents’ demand for goods, and, consequently, for the currency of this country increases, which leads to an increase in its exchange rate. The demand for foreign currency arises due to the need to pay for imported goods and foreign assets, and the supply of foreign currency increases as a result of income from exports and the purchase of national assets by foreigners.

The main functions of the foreign exchange market are as follows:

Ensuring timely implementation of international payments;
- insurance against currency risks;
- diversification of foreign exchange reserves;
- foreign exchange intervention, i.e. targeted transactions for the purchase and sale of foreign currency to limit the dynamics of the national currency exchange rate to certain limits of its increase or decrease;
- profit making by participants in the foreign exchange market in the form of differences in exchange rates.

Currently, we can say that national foreign exchange markets are closely related to each other, intertwined and are an integral part of the global world foreign exchange market, which covers the foreign exchange markets of all countries of the world. It is understood as a chain of world regional currency markets closely interconnected by a system of cable and satellite communications. The global foreign exchange market operates 24 hours a day due to the location of regional foreign exchange markets in different time zones. Not all currencies are quoted on it, but only those most used by participants in this market, i.e. local monetary units and a number of leading freely convertible currencies, primarily reserve currencies. The global market includes regional ones: the Asian foreign exchange market (with centers in Tokyo, Hong Kong, Singapore, Melbourne); European foreign exchange market (with centers in London, Frankfurt am Main, Zurich); American foreign exchange market (with centers in New York, Chicago, Los Angeles).

In the short and medium term, the exchange rate is determined by supply and demand in the foreign exchange market. In the long term, the exchange rate tends to deviate from the value basis - the purchasing power of currencies - under the influence of supply and demand, while they are complexly intertwined and put forward as determining one or the other factors.

In the long term, the exchange rate should be determined depending on the level of labor productivity in the country, the pace and quality of economic growth, the structure of the economy and involvement in international division labor.

Under the influence of the relationship between supply and demand, the exchange rate changes. A decrease in the exchange rate of the national currency indicates its depreciation and is called devaluation, and an increase in the exchange rate of the national currency is revaluation.

The result of an increase in the exchange rate of the national currency is an increase in prices for national goods on the world market, expressed in foreign currency, which leads to a reduction in their exports, the competitiveness of which is reduced. An increase in the exchange rate of the national currency leads to an increase in the price of national assets denominated in it relative to foreign assets. As a result, the outflow of capital abroad is increasing.

When the exchange rate of the national currency falls, prices for national goods on the world market, expressed in foreign currency, decrease, which leads to an increase in exports, the competitiveness of which increases. At the same time, prices for foreign goods denominated in national currency become higher, as a result of which imports are reduced and national securities denominated in national currency become cheaper. They become attractive to foreign investors, which contributes to the influx of foreign investment.

Objectives of the foreign exchange market

Foreign exchange markets are used for the following purposes:

Ensuring trade and investment.

Companies that import and export goods make payments in one currency and receive revenue in another. Consequently, it is necessary to convert part of the proceeds into the currency in which they are paid for the purchased goods. A company that acquires assets in another country and must pay for them in local currency is in a similar position.

Speculation Traders can make a profit by buying a currency at one rate and selling at another, more profitable one. Speculation accounts for the majority of transactions in the foreign exchange market.

Hedging The idea of ​​hedging is to minimize possible losses by using a range of market instruments.

Companies with assets in other countries accept the risk that the value of assets denominated in their home currency will fluctuate as a result of fluctuations in the exchange rate between the national and local currencies. Although foreign assets do not change their foreign currency value over time, they can generate both gains and losses in their owner's domestic currency as exchange rates change. Companies can avoid undesirable outcomes by using hedging. Hedging involves carrying out a foreign exchange transaction that fully compensates for the loss on assets caused by changes in the exchange rate.

Most often they hedge, for example, investments in sovereign, corporate bonds, loans, etc.

The main participants in the foreign exchange market are:

Commercial banks. They conduct the bulk of foreign exchange transactions. Other market participants hold accounts in banks and carry out the necessary conversion and deposit-credit operations with them.

In addition to satisfying customer requests, banks can conduct operations independently using their own funds.

In global currency markets, the greatest influence is exerted by large international market-making banks, whose daily transaction volume reaches billions of dollars. These are banks such as Citibank, JPMorgan Chase Bank, Deutsche Bank, ABN Amro Bank, Barclays Bank and others. If we talk about Russian market FOREX, then we can highlight the following most active market makers: Alfa Bank, Gazprombank, Raiffeisenbank, MDM-Bank, Sberbank and others.

Firms carrying out foreign trade operations. Companies involved in international trade have a steady demand for foreign currency (importers) and a supply of foreign currency (exporters), and also place and attract free currency balances into short-term deposits. At the same time, these organizations do not have direct access to the foreign exchange market and conduct conversion and deposit operations through commercial banks.

Companies investing assets abroad (Investment Funds, Money Market Funds, International Corporations). Company data presented by various international investment funds, implement a policy of diversified asset portfolio management, placing funds in securities of governments and corporations of various countries. The most famous are the George Soros Quantum fund, as well as the Morgan Stanley Dean Witter and Fidelity Fund funds. This type of company also includes large international corporations that make foreign industrial investments: the creation of branches, joint ventures, etc., such as: General Motors, British Petroleum and others.

Central banks. Their main task is currency regulation in the foreign market, i.e. preventing sharp jumps in the exchange rates of national currencies in order to prevent economic crises, maintaining an export-import balance, etc. Central banks have a direct influence on the foreign exchange market. Their influence can be either direct - in the form of foreign exchange intervention, or indirect - through regulation of the money supply and interest rates. Under foreign exchange interventions Bank of Russia refers to the purchase and sale of foreign currency by Banks of Russia on the foreign exchange market to influence the ruble exchange rate and the total demand and supply of money.

Central banks cannot be classified as “bulls” or “bears”, because they can play both up and down, based on the specific tasks facing them at the moment. The Central Bank can act on the market alone to influence the national currency, or in concert with other Central Banks to carry out a joint monetary policy in the international market or for joint interventions.

Currency exchanges. In a number of countries, currency exchanges operate, where currencies are exchanged for legal entities and the market exchange rate is formed. The state usually actively regulates the level of the exchange rate through exchanges, taking advantage of the compactness of the exchange market. Although the foreign exchange market is largely over-the-counter and therefore decentralized, operating around the clock, some of its instruments are traded on an exchange. For example, the Chicago Board of Trade is actively working with currency futures. commodity exchange(CME), and with currency options - Stock Exchange Philadelphia (PHLX). In Moscow, foreign exchange instruments are traded on the MICEX (MICEX - Moscow Interbank Currency Exchange). In addition, there are 5 more currency exchanges in Russia: St. Petersburg (SPVB), Siberian in Novosibirsk (SICEX), Asia-Pacific in Vladivostok (ATMVB), Ural Regional (URVB), Rostov (RMICE).

Working through brokers is beneficial because it saves dealers a lot of time, eliminating the need to ask prices. Due to the speculative nature of the Russian foreign exchange market, brokerage companies are in demand. Being a kind of abstracted alternative trading platform money market, a brokerage company is a source of quick information for banks about the state of the market and the dominant trend in it. It is important that the brokerage company assumes the risks associated with finding a counterparty and completing a transaction.
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Foreign exchange market is a system of economic relations between banks, as well as between banks and their clients regarding the purchase and sale of foreign currency.

Foreign currency- these are banknotes in the form of banknotes, treasury notes, coins that are in circulation and are legal tender of the relevant foreign state.

Non-cash foreign currency- funds in the form of entries in bank accounts in foreign currency units.

Foreign currency purchase and sale transactions are carried out, firstly, between two authorized banks (this means that the Central Bank has issued them a license to conduct banking operations in foreign currency), and secondly, by clients of the bank, entering into a relationship with it (the bank).

It is prohibited to carry out transactions for the purchase and sale of foreign currency bypassing banks.

Based on the legal status of participants in the foreign exchange market, both banks and clients, a distinction is made between residents and non-residents.

• Residents- these are individuals permanently residing on the territory of the Russian Federation, and legal entities created in accordance with the legislation of the Russian Federation and located on the territory of the Russian Federation.
• Non-residents- these are individuals permanently residing abroad and legal entities created in accordance with the laws of a foreign state and located on its territory.

The foreign exchange market operates in two areas:

• transactions are made on the foreign exchange exchange;
• transactions for the purchase and sale of foreign currency are carried out on the interbank foreign exchange market, when banks enter into relationships bypassing the exchange.

The functions of the foreign exchange market show the importance of the foreign exchange market for the economy:

• servicing international turnover (payments) of goods, works, services;
• the foreign exchange market forms the exchange rate under the influence of supply and demand;
• the foreign exchange market acts as an instrument of the state (Central Bank of the Russian Federation) for conducting monetary policy;
• The foreign exchange market acts as a mechanism to protect economic entities from currency risks and speculative transactions.

Features of the global foreign exchange market as a separate structure:

• the existence of an organizational mechanism to ensure the execution of foreign exchange transactions. This mechanism includes financial infrastructure(banks, exchanges, brokerage companies) and principles of behavior of participants in the global foreign exchange market, recorded in regulations and operating rules;
• The peculiarity of the global foreign exchange market is its ability to serve;
• The functioning of the global foreign exchange market is based on the fundamental market laws of supply and demand. In the global foreign exchange market, currencies of different countries become objects of international market valuation.

Functions of the foreign exchange market

Functions are the practical manifestation economic essence world foreign exchange market.

Basic functions of the world foreign exchange market: commercial, value, informational, regulatory, speculative.

a commercial function is to provide market areas with foreign and national currency.

Value function - establishing such a level of exchange rate at which the world foreign exchange market and economic system will generally be in equilibrium.

Information function - providing participants in the foreign exchange market with information about its functioning.

Regulatory function - organization of the world foreign exchange market in accordance with national and international laws.

Currency risk

Currency risk is risk of currency losses during the purchase and sale of currencies.

Conducting foreign exchange transactions is always associated with the risk of losses. To protect (insure) against currency losses in transactions of purchase and sale of foreign currencies, a system is used hedging, which represents a variety of methods and techniques for insuring the risks of currency losses. The global foreign exchange market is also characterized speculative function, since in this market a number of systematically organized speculative operations are carried out on exchange rate movements. Speculative and insurance functions (hedging) are closely related and represent two sides of one phenomenon - the global foreign exchange market.

The place of the foreign exchange market can be presented as follows (Fig. 79):

Rice. 79 The place of the foreign exchange market in the national economy

where 1 - loans and deposits of enterprises; 2 - and consumption; 3 - foreign currency savings of the population; 4 - export and import; 5 — export and import, monetary component; 6 - loans and deposits of the population; 7 — attraction and placement of loans; 8 — purchase of securities; 9 — investments in foreign currency; 10 — attraction and placement of capital.

Foreign exchange market structure

The global foreign exchange market is a complex system consisting of many elements that are classified according to a number of criteria.

By venue differentiate stock exchange And over-the-counter sectors of the foreign exchange market. Exchange foreign exchange market is currency trading on specially organized currency exchanges. On over the counter In the market, currency trading is carried out mainly between commercial banks.

Depending on the payment forms differentiate spot And non-cash sectors of the foreign exchange market.

Depending on the period of operations differentiate current And urgent currency market.

In actual practice, the world foreign exchange market is classified as follows: exchange, over-the-counter, futures and current. The formation of a national foreign exchange market, as a rule, begins with a foreign exchange exchange. The largest sector of the currency exchange is urgent currency market. Derivatives market divided by futures And forward(Table 4).

Table 4 Differences between futures and forward foreign exchange markets

Main characteristics	Futures market	Forward market
Counterparties of foreign exchange transactions	The seller is the clearing house; buyer - exchange	Seller-buyer - commercial banks
Size and execution period of the currency contract	Standard	Determined on an individual basis
Pricing	Based on the movement of stock quotes	Free agreement
Real currency supply
Availability	No restrictions, but through brokers	Limited to the circle of bank clients
Guarantees	Reserve deposit	Installed individually
Information transparency		Limited

Foreign exchange market participants

Participants global foreign exchange market - legal entities and individuals performing transactions on the global foreign exchange market.

By purpose participating in operations on the global foreign exchange market, participants in this market are divided into five groups: entrepreneurs, hedgers, speculators, intermediaries And currency regulation authorities. Entrepreneurs— these are participants in the foreign exchange market, whose task is to ensure foreign exchange transactions. This category of participants is primary in relation to others. Hedgers— these are participants in the foreign exchange market who insure currency risk when performing foreign exchange transactions. Speculators— participants in the global foreign exchange market, carrying out the bulk of transactions based on differences in exchange rates. Intermediaries— specialize in providing currency trading services. Brokers are exchange intermediaries who carry out currency transactions at the expense and on behalf of clients. Dealers act on the foreign exchange market on their own behalf and at their own expense.

Currency regulation and control authorities are government agencies, whose functions include regulation, supervision and control of foreign exchange transactions and the foreign exchange market.

Foreign exchange market participants

Market Participants
Commercial banks	Transactions for clients Trading for your own account	Making payments Making a profit or leveling positions on client transactions
Enterprises (importers, exporters)	Buying and selling currencies Transactions to insure currency risks Receiving and providing a loan in foreign currency	Payments in foreign currency Creating a reliable base for cost calculation, eliminating currency risks Obtaining favorable conditions
Central banks	Buying and selling currencies Interventions	Payments, collection of checks, accounting of bills, etc. Buying and selling currencies to maintain foreign exchange markets and ensure their normal functioning
	Mediation in foreign exchange and interest transactions, setting exchange rates
Currency Exchanges	Transactions for clients	Receiving profit in the form of commissions or interest on the transaction