Importance of Hedging in Foreign Exchange Market

abhishreshthaa

New member
Foreign Exchange Market


The foreign exchange market is the market in which currencies are brought and sold against each other. It is the largest market in the world. Foreign exchange market is an over the counter market.


This means there is no single market place or an organized market place or an organized exchange (like a stock exchange) where traders meet and exchange currency.


The traders sit in the offices (foreign exchange dealing rooms) of major commercial banks around the world and communicate with each other through telephones, telex, computer terminals and other electronic means of communication.


Hedging:

Hedging means a transaction undertaken specifically to offset some exposure arising out of the firm’s usual operations.


In other words, a transaction that reduces the price risk of an underlying security or commodity position by making the appropriate offsetting derivative transaction.
 

rosemarry2

MP Guru
Foreign Exchange Market


The foreign exchange market is the market in which currencies are brought and sold against each other. It is the largest market in the world. Foreign exchange market is an over the counter market.


This means there is no single market place or an organized market place or an organized exchange (like a stock exchange) where traders meet and exchange currency.


The traders sit in the offices (foreign exchange dealing rooms) of major commercial banks around the world and communicate with each other through telephones, telex, computer terminals and other electronic means of communication.


Hedging:

Hedging means a transaction undertaken specifically to offset some exposure arising out of the firm’s usual operations.


In other words, a transaction that reduces the price risk of an underlying security or commodity position by making the appropriate offsetting derivative transaction.

hey buddy,

Here I am sharing Foreign exchange market structure, players and evolution, so please download and check it.
 

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