Page 50 - Bank Case Studies
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Foreign Exchange Fine
WHAT IS FOREIGN EXCHANGE
Foreign exchange (FX) is the mechanism
by which the currency of one country
gets converted into the currency of another country. This conversion
is done by the banks who deal in foreign exchange. These banks
maintain stocks of currencies in the form of balances with banks.
The Foreign Exchange Market
Exchange
rate
The
Converting Foreign Reducing
currencies Exchange risk
Market
Foreign
exchange
risk
The FX market is a market for converting the currency of one country
into the currency of another. It relates to:
Exchange rate: The rate at which one currency is
converted into another
Foreign exchange risk: The risk that arises from changes
in exchange rates
