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ForeignexchangemarketFromWikipedia,thefreeencyclopedia

Theforeignexchangemarket(forex,FX,orcurrencymarket)isaglobaldecentralizedmarketforthetradingofcurrencies.Intermsofvolumeoftrading,itisbyfarthelargestmarketintheworld.[1]Themainparticipantsinthismarketarethelargerinternationalbanks.Financialcentresaroundtheworldfunctionasanchorsoftradingbetweenawiderangeofmultipletypesofbuyersandsellersaroundtheclock,withtheexceptionofweekends.Theforeignexchangemarketdeterminestherelativevaluesofdifferentcurrencies.[2]

Theforeignexchangemarketworksthroughfinancialinstitutions,anditoperatesonseverallevels.Behindthescenesbanksturntoasmallernumberoffinancialfirmsknownasdealers,whoareactivelyinvolvedinlargequantitiesofforeignexchangetrading.Mostforeignexchangedealersarebanks,sothisbehindthescenesmarketissometimescalledtheinterbankmarket,althoughafewinsurancecompaniesandotherkindsoffinancialfirmsareinvolved.Tradesbetweenforeignexchangedealerscanbeverylarge,involvinghundredsofmillionsofdollars.Becauseofthesovereigntyissuewheninvolvingtwocurrencies,forexhaslittle(ifany)supervisoryentityregulatingitsactions.

Theforeignexchangemarketassistsinternationaltradeandinvestmentsbyenablingcurrencyconversion.Forexample,itpermitsabusinessintheUnitedStatestoimportgoodsfromtheEuropeanUnionmemberstates,especiallyEurozonemembers,andpayEuros,eventhoughitsincomeisinUnitedStatesdollars.Italsosupportsdirectspeculationandevaluationrelativetothevalueofcurrencies,andthecarrytrade,speculationbasedontheinterestratedifferentialbetweentwocurrencies.[3]

Inatypicalforeignexchangetransaction,apartypurchasessomequantityofonecurrencybypayingwithsomequantityofanothercurrency.Themodernforeignexchangemarketbeganformingduringthe1970safterthreedecadesofgovernmentrestrictionsonforeignexchangetransactions(theBrettonWoodssystemofmonetarymanagementestablishedtherulesforcommercialandfinancialrelationsamongtheworld'smajorindustrialstatesafterWorldWarII),whencountriesgraduallyswitchedtofloatingexchangeratesfromthepreviousexchangerateregime,whichremainedfixedaspertheBrettonWoodssystem.

Theforeignexchangemarketisuniquebecauseofthefollowingcharacteristics:

itshugetradingvolumerepresentingthelargestassetclassintheworldleadingtohighliquidityitsgeographicaldispersionitscontinuousoperation:24hoursadayexceptweekends,i.e.,tradingfrom22:00GMTonSunday(Sydney)until22:00GMTFriday(NewYork)thevarietyoffactorsthataffectexchangeratesthelowmarginsofrelativeprofitcomparedwithothermarketsoffixedincomeandtheuseofleveragetoenhanceprofitandlossmarginsandwithrespecttoaccountsize.

Assuch,ithasbeenreferredtoasthemarketclosesttotheidealofperfectcompetition,notwithstandingcurrencyinterventionbycentralbanks.

AccordingtotheBankforInternationalSettlements,[4]thepreliminaryglobalresultsfromthe2013TriennialCentralBankSurveyofForeignExchangeandOTCDerivativesMarketsActivityshowthattradinginforeignexchangemarketsaveraged$5.3trillionperdayinApril2013.Thisisupfrom$4.0trillioninApril2010and$3.3trillioninApril2007.ForeignexchangeswapswerethemostactivelytradedinstrumentsinApril2013,at$2.2trillionperday,followedbyspottradingat$2.0trillion.



AccordingtotheBankforInternationalSettlements,[5]asofApril2010,averagedailyturnoveringlobalforeignexchangemarketsisestimatedat$3.98trillion,agrowthofapproximately20%overthe$3.21trilliondailyvolumeasofApril2007.SomefirmsspecializingonforeignexchangemarkethadputtheaveragedailyturnoverinexcessofUS$4trillion.[6]The$3.98trillionbreakdownisasfollows:

$1.490trillioninspottransactions$475billioninoutrightforwards$1.765trillioninforeignexchangeswaps$43billioncurrencyswaps$207billioninoptionsandotherproducts

Contents

1History1.1Ancient1.2Medievalandlater1.3Earlymodern1.4Moderntopostmodern

1.4.1AfterWWII1.4.2Marketsclose1.4.3After1973

2Marketsizeandliquidity3Marketparticipants

3.1Commercialcompanies3.2Centralbanks3.3Foreignexchangefixing3.4Hedgefundsasspeculators3.5Investmentmanagementfirms3.6Retailforeignexchangetraders3.7Nonbankforeignexchangecompanies3.8Moneytransfer/remittancecompaniesandbureauxdechange

4Tradingcharacteristics5Determinantsofexchangerates

5.1Economicfactors5.2Politicalconditions5.3Marketpsychology

6Financialinstruments6.1Spot6.2Forward6.3Swap6.4Futures6.5Option

7Speculation8Riskaversion9Carrytrade10Forexsignals11Seealso12References13Externallinks



History

Ancient

Currencytradingandexchangefirstoccurredinancienttimes.[7]Moneychangingpeople,peoplehelpingotherstochangemoneyandalsotakingacommissionorchargingafeewerelivinginthetimesoftheTalmudicwritings(Biblicaltimes).Thesepeople(sometimescalled"kollybists")usedcitystalls,atfeasttimesthetemplesCourtoftheGentilesinstead.[8]Moneychangerswerealsoinmorerecentancienttimessilversmithsand/orgoldsmiths.[9]

Duringthe4thcentury,theByzantinegovernmentkeptamonopolyontheexchangeofcurrency.[10]

PapyriPCZI59021(c.259/8BC),showstheoccurrencesofexchangeofcoinagewithinAncientEgypt.[11]

Currencyandexchangewasalsoavitalandcrucialelementoftradeduringtheancientworldsothatpeoplecouldbuyandsellitemslikefood,potteryandrawmaterials.[12]IfaGreekcoinheldmoregoldthananEgyptiancoinduetoitssizeorcontent,thenamerchantcouldbarterfewerGreekgoldcoinsformoreEgyptianones,orformorematerialgoods.Thisiswhy,atsomepointintheirhistory,mostworldcurrenciesincirculationtodayhadavaluefixedtoaspecificquantityofarecognizedstandardlikesilverandgold.

Medievalandlater

Duringthe15thcentury,theMedicifamilywererequiredtoopenbanksatforeignlocationsinordertoexchangecurrenciestoactonbehalfoftextilemerchants.[13][14]Tofacilitatetradethebankcreatedthenostro(fromItaliantranslated"ours")accountbookwhichcontainedtwocolumnedentriesshowingamountsofforeignandlocalcurrencies,informationpertainingtothekeepingofanaccountwithaforeignbank.[15][16][17][18]Duringthe17th(or18th)century,Amsterdammaintainedanactiveforexmarket.[19]In1704,foreignexchangetookplacebetweenagentsactingintheinterestsoftheKingdomofEnglandandtheCountyofHolland.[20]

Earlymodern

Alex.Brown&Sonstradedforeigncurrenciesexchangesometimeabout1850andwasaleadingparticipantinthiswithinU.S.A.[21]During1880,J.M.doEspritoSantodeSilva(BancoEspritoSanto)appliedforandwasgivenpermissiontobegintoengageinaforeignexchangetradingbusiness.[22][23]

Theyear1880isconsideredbyatleastonesourcetobethebeginningofmodernforeignexchange,significantforthefactofthebeginningofthegoldstandardduringtheyear.[24]

Priortothefirstworldwar,therewasamuchmorelimitedcontrolofinternationaltrade.Motivatedbytheoutsetofwar,countriesabandonedthegoldstandardmonetarysystem.[25]

Moderntopostmodern

From1899to1913,holdingsofcountries'foreignexchangeincreasedatanannualrateof10.8%,whileholdingsofgoldincreasedatanannualrateof6.3%between1903and1913.[26]



Atthetimeoftheclosingoftheyear1913,nearlyhalfoftheworld'sforeignexchangewasconductedusingthePoundsterling.[27]ThenumberofforeignbanksoperatingwithintheboundariesofLondonincreasedfrom3in1860to71in1913.In1902,therewerealtogethertwoLondonforeignexchangebrokers.[28]Duringtheearliestyearsofthe20thcentury,tradewasmostactiveinParis,NewYorkandBerlin,whileBritainremainedlargelyuninvolvedintradeuntil1914.Between1919and1922,theemploymentofforeignexchangebrokerswithinLondonincreasedto17,in1924therewere40firmsoperatingforthepurposesofexchange.[29]Duringthe1920stheoccurrenceoftradeinLondonresembledmorethemodernmanifestation,by1928forextradewasintegraltothefinancialfunctioningofthecity.Continentalexchangecontrols,plusotherfactors,inEuropeandLatinAmerica,hamperedanyattemptatwholesaleprosperityfromtradeforthoseof1930'sLondon.[30]

Duringthe1920s,theKleinwortfamilywereknowntobetheleadersoftheforeignexchangemarketwhileJapheth,Montagu&Co.,andSeligmanstillwarrantrecognitionassignificantFXtraders.[31]

AfterWWII

AfterWWII,theBrettonWoodsAccordwassignedallowingcurrenciestofluctuatewithinarangeof1%tothecurrenciespar.[32]InJapanthelawwaschangedduring1954bytheForeignExchangeBankLaw,so,theBankofTokyowastobecome,becauseofthis,thecentreofforeignexchangebySeptemberofthatyear.Between1954and1959JapaneselawwasmadetoallowtheinclusionofmanymoreOccidentalcurrenciesinJapaneseforex.[33]

U.S.PresidentRichardNixoniscreditedwithendingtheBrettonWoodsAccordandfixedratesofexchange,eventuallybringingaboutafreefloatingcurrencysystem.Aftertheceasingoftheenactmentofthe"BrettonWoodsAccord"during1971,[34]theSmithsonianAgreementallowedtradingtorangeto2%.During196162,theamountofforeignoperationsbytheU.S.FederalReservewasrelativelylow.[35][36]ThoseinvolvedincontrollingexchangeratesfoundtheboundariesoftheAgreementwerenotrealisticandsoceasedthisinMarch1973,whensometimeafterwardnoneofthemajorcurrenciesweremaintainedwithacapacityforconversiontogold,organisationsreliedinsteadonreservesofcurrency.[37][38]During1970to1973theamountoftradesoccurringinthemarketincreasedthreefold.[39][40][41]Atsometime(accordingtoGandolfoduringFebruaryMarch1973)someofthemarkets'were"split",soatwotiercurrencymarketwassubsequentlyintroduced,withdualcurrencyrates.ThiswasabolishedduringMarch1974.[42][43][44]

ReutersintroducedduringJune1973computermonitors,replacingthetelephonesandtelexusedpreviouslyfortradingquotes.[45]

Marketsclose

DuetotheultimateineffectivenessoftheBrettonWoodsAccordandtheEuropeanJointFloattheforexmarketswereforcedtoclosesometimeduring1972andMarch1973.[46][47]Theverylargestofallpurchasesofdollarsinthehistoryof1976waswhentheWestGermangovernmentachievedanalmost3billiondollaracquisition(afiguregivenas2.75billionintotalbyTheStatesman:Volume181974),thiseventindicatedtheimpossibilityofthebalancingofexchangestabilitiesbythemeasuresofcontrolusedatthetimeandthemonetarysystemandtheforeignexchangemarketsin"West"GermanyandothercountrieswithinEuropeclosedfortwoweeks(duringFebruaryand,or,March1973.Giersch,Paqu,&



Mainforeignexchangemarketturnover,19882007,measuredinbillionsofUSD.

Schmiedingstateclosedafterpurchaseof"7.5millionDmarks"Brawleystates"...Exchangemarketshadtobeclosed.Whentheyreopened...March1"thatisalargepurchaseoccurredaftertheclose).[48][49][50][51]

After1973

Theyear1973marksthepointtowhichnationstate,bankingtradeandcontrolledforeignexchangeendedandcompletefloating,relativelyfreeconditionsofamarketcharacteristicofthesituationincontemporarytimesbegan(accordingtoonesource),[52]althoughanotherstatesthefirsttimeacurrencypairweregivenasanoptionforU.S.A.traderstopurchasewasduring1982,withadditionalcurrenciesavailablebythenextyear.[53][54]

On1January1981,aspartofchangesbeginningduring1978,thePeople'sBankofChinaallowedcertaindomestic"enterprises"toparticipateinforeignexchangetrading.[55][56]Sometimeduring1981,theSouthKoreangovernmentendedforexcontrolsandallowedfreetradetooccurforthefirsttime.During1988thecountriesgovernmentacceptedtheIMFquotaforinternationaltrade.[57]

InterventionbyEuropeanbanksespeciallytheBundesbankinfluencedtheforexmarket,on27February1985particularly.[58]Thegreatestproportionofalltradesworldwideduring1987werewithintheUnitedKingdom,slightlyoveronequarter,withtheU.S.ofAmericathenationwiththesecondmostplacesinvolvedintrading.[59]

During1991therepublicofIranchangedinternationalagreementswithsomecountriesfromoilbartertoforeignexchange.[60]

Marketsizeandliquidity

Theforeignexchangemarketisthemostliquidfinancialmarketintheworld.Tradersincludelargebanks,centralbanks,institutionalinvestors,currencyspeculators,corporations,governments,otherfinancialinstitutions,andretailinvestors.Theaveragedailyturnoverintheglobalforeignexchangeandrelatedmarketsiscontinuouslygrowing.Accordingtothe2010TriennialCentralBankSurvey,coordinatedbytheBankforInternationalSettlements,averagedailyturnoverwasUS$3.98trillioninApril2010(vs$1.7trillionin1998).[5]Ofthis$3.98trillion,$1.5trillionwasspottransactionsand$2.5trillionwastradedinoutrightforwards,swapsandotherderivatives.

InApril2010,tradingintheUnitedKingdomaccountedfor36.7%ofthetotal,makingitbyfarthemostimportantcentreforforeignexchangetrading.TradingintheUnitedStatesaccountedfor17.9%andJapanaccountedfor6.2%.[61]

InApril2013,forthefirsttime,SingaporesurpassedJapaninaveragedailyforeignexchangetradingvolumewith$383billionperday.Sotherankbecame:theUnitedKingdom(41%),theUnitedStates(19%),Singapore(5.7)%,Japan(5.6%)andHongKong(4.1%).[62]



Turnoverofexchangetradedforeignexchangefuturesandoptionshavegrownrapidlyinrecentyears,reaching$166billioninApril2010(doubletheturnoverrecordedinApril2007).Exchangetradedcurrencyderivativesrepresent4%ofOTCforeignexchangeturnover.Foreignexchangefuturescontractswereintroducedin1972attheChicagoMercantileExchangeandareactivelytradedrelativetomostotherfuturescontracts.

Mostdevelopedcountriespermitthetradingofderivativeproducts(likefuturesandoptionsonfutures)ontheirexchanges.Allthesedevelopedcountriesalreadyhavefullyconvertiblecapitalaccounts.Somegovernmentsofemergingmarketsdonotallowforeignexchangederivativeproductsontheirexchangesbecausetheyhavecapitalcontrols.Theuseofderivativesisgrowinginmanyemergingeconomies.[63]CountriessuchasSouthKorea,SouthAfrica,andIndiahaveestablishedcurrencyfuturesexchanges,despitehavingsomecapitalcontrols.

Foreignexchangetradingincreasedby20%betweenApril2007andApril2010andhasmorethandoubledsince2004.[64]Theincreaseinturnoverisduetoanumberoffactors:thegrowingimportanceofforeignexchangeasanassetclass,theincreasedtradingactivityofhighfrequencytraders,andtheemergenceofretailinvestorsasanimportantmarketsegment.Thegrowthofelectronicexecutionandthediverseselectionofexecutionvenueshasloweredtransactioncosts,increasedmarketliquidity,andattractedgreaterparticipationfrommanycustomertypes.Inparticular,electronictradingviaonlineportalshasmadeiteasierforretailtraderstotradeintheforeignexchangemarket.By2010,retailtradingisestimatedtoaccountforupto10%ofspotturnover,or$150billionperday(seebelow:Retailforeignexchangetraders).

Foreignexchangeisanoverthecountermarketwherebrokers/dealersnegotiatedirectlywithoneanother,sothereisnocentralexchangeorclearinghouse.ThebiggestgeographictradingcenteristheUnitedKingdom,primarilyLondon,whichaccordingtoTheCityUKestimateshasincreaseditsshareofglobalturnoverintraditionaltransactionsfrom34.6%inApril2007to36.7%inApril2010.DuetoLondon'sdominanceinthemarket,aparticularcurrency'squotedpriceisusuallytheLondonmarketprice.Forinstance,whentheInternationalMonetaryFundcalculatesthevalueofitsspecialdrawingrightseveryday,theyusetheLondonmarketpricesatnoonthatday.

Marketparticipants

Unlikeastockmarket,theforeignexchangemarketisdividedintolevelsofaccess.Atthetopistheinterbankmarket,whichismadeupofthelargestcommercialbanksandsecuritiesdealers.Withintheinterbankmarket,spreads,whicharethedifferencebetweenthebidandaskprices,arerazorsharpandnotknowntoplayersoutsidetheinnercircle.Thedifferencebetweenthebidandaskpriceswidens(forexamplefrom0to1pipto12pipsforcurrenciessuchastheEUR)asyougodownthelevelsofaccess.Thisisduetovolume.Ifatradercanguaranteelargenumbersoftransactionsforlargeamounts,theycandemandasmallerdifferencebetweenthebidandaskprice,whichisreferredtoasabetterspread.Thelevelsofaccessthatmakeuptheforeignexchangemarketaredeterminedbythesizeofthe"line"(theamountofmoneywithwhichtheyaretrading).Thetoptierinterbankmarketaccountsfor39%ofalltransactions.[61]Fromthere,smallerbanks,followedbylargemultinationalcorporations(whichneedtohedgeriskandpayemployeesindifferentcountries),largehedgefunds,andevensomeoftheretailmarketmakers.AccordingtoGalatiandMelvin,Pensionfunds,insurancecompanies,mutualfunds,andotherinstitutionalinvestorshaveplayedanincreasinglyimportantroleinfinancialmarketsingeneral,andinFXmarketsinparticular,sincetheearly2000s.(2004)Inaddition,henotes,Hedgefundshavegrownmarkedlyoverthe20012004periodintermsofbothnumberandoverallsize.[66]Centralbanksalsoparticipateintheforeignexchangemarkettoaligncurrenciestotheireconomicneeds.



Top10currencytraders[65]%ofoverallvolume,May2015

Rank Name Marketshare1 Citi 16.11%2 DeutscheBank 14.54%

3 BarclaysInvestmentBank 8.11%4 JPMorgan 7.65%

5 UBSAG 7.30%

6 BankofAmericaMerrillLynch 6.22%7 HSBC 5.40%8 BNPParibas 3.65%

9 GoldmanSachs 3.40%10 RoyalBankofScotland 3.38%

Commercialcompanies

Animportantpartoftheforeignexchangemarketcomesfromthefinancialactivitiesofcompaniesseekingforeignexchangetopayforgoodsorservices.Commercialcompaniesoftentradefairlysmallamountscomparedtothoseofbanksorspeculators,andtheirtradesoftenhavelittleshorttermimpactonmarketrates.Nevertheless,tradeflowsareanimportantfactorinthelongtermdirectionofacurrency'sexchangerate.Somemultinationalcorporations(MNCs)canhaveanunpredictableimpactwhenverylargepositionsarecoveredduetoexposuresthatarenotwidelyknownbyothermarketparticipants.

Centralbanks

Nationalcentralbanksplayanimportantroleintheforeignexchangemarkets.Theytrytocontrolthemoneysupply,inflation,and/orinterestratesandoftenhaveofficialorunofficialtargetratesfortheircurrencies.Theycanusetheiroftensubstantialforeignexchangereservestostabilizethemarket.Nevertheless,theeffectivenessofcentralbank"stabilizingspeculation"isdoubtfulbecausecentralbanksdonotgobankruptiftheymakelargelosses,likeothertraderswould,andthereisnoconvincingevidencethattheydomakeaprofittrading.

Foreignexchangefixing

Foreignexchangefixingisthedailymonetaryexchangeratefixedbythenationalbankofeachcountry.Theideaisthatcentralbanksusethefixingtimeandexchangeratetoevaluatebehavioroftheircurrency.Fixingexchangeratesreflectstherealvalueofequilibriuminthemarket.Banks,dealersandtradersusefixingratesasatrendindicator.

Themereexpectationorrumorofacentralbankforeignexchangeinterventionmightbeenoughtostabilizeacurrency,butaggressiveinterventionmightbeusedseveraltimeseachyearincountrieswithadirtyfloatcurrencyregime.Centralbanksdonotalwaysachievetheirobjectives.Thecombinedresourcesofthemarketcaneasilyoverwhelmanycentralbank.[67]Severalscenariosofthisnaturewereseeninthe199293EuropeanExchangeRateMechanismcollapse,andinmorerecenttimesinAsia.

Hedgefundsasspeculators

About70%to90%oftheforeignexchangetransactionsconductedarespeculative.Thismeansthepersonorinstitutionthatboughtorsoldthecurrencyhasnoplantoactuallytakedeliveryofthecurrencyintheendrather,theyweresolelyspeculatingonthemovementofthatparticularcurrency.Since1996,hedgefundshavegainedareputationforaggressivecurrencyspeculation.Theycontrolbillionsofdollarsofequityandmayborrowbillionsmore,andthusmayoverwhelminterventionbycentralbankstosupportalmostanycurrency,iftheeconomicfundamentalsareinthehedgefunds'favor.

Investmentmanagementfirms



Investmentmanagementfirms(whotypicallymanagelargeaccountsonbehalfofcustomerssuchaspensionfundsandendowments)usetheforeignexchangemarkettofacilitatetransactionsinforeignsecurities.Forexample,aninvestmentmanagerbearinganinternationalequityportfolioneedstopurchaseandsellseveralpairsofforeigncurrenciestopayforforeignsecuritiespurchases.

Someinvestmentmanagementfirmsalsohavemorespeculativespecialistcurrencyoverlayoperations,whichmanageclients'currencyexposureswiththeaimofgeneratingprofitsaswellaslimitingrisk.Whilethenumberofthistypeofspecialistfirmsisquitesmall,manyhavealargevalueofassetsundermanagementand,hence,cangeneratelargetrades.

Retailforeignexchangetraders

Individualretailspeculativetradersconstituteagrowingsegmentofthismarketwiththeadventofretailforeignexchangetrading,bothinsizeandimportance.Currently,theyparticipateindirectlythroughbrokersorbanks.Retailbrokers,whilelargelycontrolledandregulatedintheUSAbytheCommodityFuturesTradingCommissionandNationalFuturesAssociation,haveinthepastbeensubjectedtoperiodicforeignexchangefraud.[68][69]Todealwiththeissue,in2010theNFArequireditsmembersthatdealintheForexmarketstoregisterassuch(I.e.,ForexCTAinsteadofaCTA).ThoseNFAmembersthatwouldtraditionallybesubjecttominimumnetcapitalrequirements,FCMsandIBs,aresubjecttogreaterminimumnetcapitalrequirementsiftheydealinForex.AnumberoftheforeignexchangebrokersoperatefromtheUKunderFinancialServicesAuthorityregulationswhereforeignexchangetradingusingmarginispartofthewideroverthecounterderivativestradingindustrythatincludesContractfordifferencesandfinancialspreadbetting.

TherearetwomaintypesofretailFXbrokersofferingtheopportunityforspeculativecurrencytrading:brokersanddealersormarketmakers.BrokersserveasanagentofthecustomerinthebroaderFXmarket,byseekingthebestpriceinthemarketforaretailorderanddealingonbehalfoftheretailcustomer.Theychargeacommissionormarkupinadditiontothepriceobtainedinthemarket.Dealersormarketmakers,bycontrast,typicallyactasprincipalinthetransactionversustheretailcustomer,andquoteapricetheyarewillingtodealat.

Nonbankforeignexchangecompanies

Nonbankforeignexchangecompaniesoffercurrencyexchangeandinternationalpaymentstoprivateindividualsandcompanies.Thesearealsoknownasforeignexchangebrokersbutaredistinctinthattheydonotofferspeculativetradingbutrathercurrencyexchangewithpayments(i.e.,thereisusuallyaphysicaldeliveryofcurrencytoabankaccount).

ItisestimatedthatintheUK,14%ofcurrencytransfers/paymentsaremadeviaForeignExchangeCompanies.[70]Thesecompanies'sellingpointisusuallythattheywillofferbetterexchangeratesorcheaperpaymentsthanthecustomer'sbank.[71]ThesecompaniesdifferfromMoneyTransfer/RemittanceCompaniesinthattheygenerallyofferhighervalueservices.

Moneytransfer/remittancecompaniesandbureauxdechange

Moneytransfercompanies/remittancecompaniesperformhighvolumelowvaluetransfersgenerallybyeconomicmigrantsbacktotheirhomecountry.In2007,theAiteGroupestimatedthattherewere$369billionofremittances(anincreaseof8%onthepreviousyear).Thefourlargestmarkets(India,China,MexicoandthePhilippines)receive$95billion.ThelargestandbestknownproviderisWesternUnionwith345,000agentsgloballyfollowedbyUAEExchange.



MosttradedcurrenciesbyvalueCurrencydistributionofglobalforeignexchangemarketturnover[72][5]

Rank Currency ISO4217code(Symbol)%dailyshare(April2013)

1 UnitedStatesdollar USD($) 87.0%2 Euro EUR() 33.4%3 Japaneseyen JPY() 23.0%4 Poundsterling GBP() 11.8%5 Australiandollar AUD($) 8.6%6 Swissfranc CHF(Fr) 5.2%7 Canadiandollar CAD($) 4.6%8 Mexicanpeso MXN($) 2.5%9 Chineseyuan CNY() 2.2%10 NewZealanddollar NZD($) 2.0%11 Swedishkrona SEK(kr) 1.8%12 Russianruble RUB() 1.6%13 HongKongdollar HKD($) 1.4%14 Norwegiankrone NOK(kr) 1.4%

15 Singaporedollar SGD($) 1.4%

16 Turkishlira TRY() 1.3%17 SouthKoreanwon KRW() 1.2%18 SouthAfricanrand ZAR(R) 1.1%19 Brazilianreal BRL(R$) 1.1%

20 Indianrupee INR() 1.0%Other 6.3%

Total[73] 200%

Bureauxdechangeorcurrencytransfercompaniesprovidelowvalueforeignexchangeservicesfortravelers.Thesearetypicallylocatedatairportsandstationsorattouristlocationsandallowphysicalnotestobeexchangedfromonecurrencytoanother.Theyaccesstheforeignexchangemarketsviabanksornonbankforeignexchangecompanies.

Tradingcharacteristics

Thereisnounifiedorcentrallyclearedmarketforthemajorityoftrades,andthereisverylittlecrossborderregulation.Duetotheoverthecounter(OTC)natureofcurrencymarkets,thereareratheranumberofinterconnectedmarketplaces,wheredifferentcurrenciesinstrumentsaretraded.Thisimpliesthatthereisnotasingleexchangeratebutratheranumberofdifferentrates(prices),dependingonwhatbankormarketmakeristrading,andwhereitis.Inpracticetheratesarequitecloseduetoarbitrage.DuetoLondon'sdominanceinthemarket,aparticularcurrency'squotedpriceisusuallytheLondonmarketprice.MajortradingexchangesincludeElectronicBrokingServices(EBS)andThomsonReutersDealing,whilemajorbanksalsooffertradingsystems.AjointventureoftheChicagoMercantileExchangeandReuters,calledFxmarketspaceopenedin2007andaspiredbutfailedtotheroleofacentralmarketclearingmechanism.

ThemaintradingcentersareLondonandNewYorkCity,thoughTokyo,HongKongandSingaporeareallimportantcentersaswell.Banksthroughouttheworldparticipate.CurrencytradinghappenscontinuouslythroughoutthedayastheAsiantradingsessionends,theEuropeansessionbegins,followedbytheNorthAmericansessionandthenbacktotheAsiansession,excludingweekends.

Fluctuationsinexchangeratesareusuallycausedbyactualmonetaryflowsaswellasbyexpectationsofchangesinmonetaryflowscausedbychangesingrossdomesticproduct(GDP)growth,inflation(purchasingpowerparitytheory),interestrates(interestrateparity,DomesticFishereffect,InternationalFishereffect),budgetandtradedeficitsorsurpluses,largecrossborderM&Adealsandother



macroeconomicconditions.Majornewsisreleasedpublicly,oftenonscheduleddates,somanypeoplehaveaccesstothesamenewsatthesametime.However,thelargebankshaveanimportantadvantagetheycanseetheircustomers'orderflow.

Currenciesaretradedagainstoneanotherinpairs.EachcurrencypairthusconstitutesanindividualtradingproductandistraditionallynotedXXXYYYorXXX/YYY,whereXXXandYYYaretheISO4217internationalthreelettercodeofthecurrenciesinvolved.Thefirstcurrency(XXX)isthebasecurrencythatisquotedrelativetothesecondcurrency(YYY),calledthecountercurrency(orquotecurrency).Forinstance,thequotationEURUSD(EUR/USD)1.5465isthepriceoftheEuroexpressedinUSdollars,meaning1euro=1.5465dollars.ThemarketconventionistoquotemostexchangeratesagainsttheUSDwiththeUSdollarasthebasecurrency(e.g.USDJPY,USDCAD,USDCHF).TheexceptionsaretheBritishpound(GBP),Australiandollar(AUD),theNewZealanddollar(NZD)andtheeuro(EUR)wheretheUSDisthecountercurrency(e.g.GBPUSD,AUDUSD,NZDUSD,EURUSD).

ThefactorsaffectingXXXwillaffectbothXXXYYYandXXXZZZ.ThiscausespositivecurrencycorrelationbetweenXXXYYYandXXXZZZ.

Onthespotmarket,accordingtothe2013TriennialSurvey,themostheavilytradedbilateralcurrencypairswere:

EURUSD:24.1%USDJPY:18.3%GBPUSD(alsocalledcable):8.8%

andtheUScurrencywasinvolvedin87.0%oftransactions,followedbytheeuro(33.4%),theyen(23.0%),andsterling(11.8%)(seetable).Volumepercentagesforallindividualcurrenciesshouldaddupto200%,aseachtransactioninvolvestwocurrencies.

Tradingintheeurohasgrownconsiderablysincethecurrency'screationinJanuary1999,andhowlongtheforeignexchangemarketwillremaindollarcenteredisopentodebate.Untilrecently,tradingtheeuroversusanonEuropeancurrencyZZZwouldhaveusuallyinvolvedtwotrades:EURUSDandUSDZZZ.TheexceptiontothisisEURJPY,whichisanestablishedtradedcurrencypairintheinterbankspotmarket.

Determinantsofexchangerates

Thefollowingtheoriesexplainthefluctuationsinexchangeratesinafloatingexchangerateregime(Inafixedexchangerateregime,ratesaredecidedbyitsgovernment):

1. Internationalparityconditions:Relativepurchasingpowerparity,interestrateparity,DomesticFishereffect,InternationalFishereffect.Thoughtosomeextenttheabovetheoriesprovidelogicalexplanationforthefluctuationsinexchangerates,yetthesetheoriesfalterastheyarebasedonchallengeableassumptions[e.g.,freeflowofgoods,servicesandcapital]whichseldomholdtrueintherealworld.

2. Balanceofpaymentsmodel:Thismodel,however,focuseslargelyontradablegoodsandservices,ignoringtheincreasingroleofglobalcapitalflows.Itfailedtoprovideanyexplanationforcontinuousappreciationofdollarduringthe1980sandmostpartofthe1990sinfaceofsoaringUScurrentaccountdeficit.

3. Assetmarketmodel:viewscurrenciesasanimportantassetclassforconstructinginvestmentportfolios.Assetspricesareinfluencedmostlybypeople'swillingnesstoholdtheexistingquantitiesofassets,whichinturndependsontheirexpectationsonthefutureworthoftheseassets.Theassetmarketmodelofexchangeratedeterminationstatesthattheexchangerate



betweentwocurrenciesrepresentsthepricethatjustbalancestherelativesuppliesof,anddemandfor,assetsdenominatedinthosecurrencies.

Noneofthemodelsdevelopedsofarsucceedtoexplainexchangeratesandvolatilityinthelongertimeframes.Forshortertimeframes(lessthanafewdays),algorithmscanbedevisedtopredictprices.Itisunderstoodfromtheabovemodelsthatmanymacroeconomicfactorsaffecttheexchangeratesandintheendcurrencypricesarearesultofdualforcesofdemandandsupply.Theworld'scurrencymarketscanbeviewedasahugemeltingpot:inalargeandeverchangingmixofcurrentevents,supplyanddemandfactorsareconstantlyshifting,andthepriceofonecurrencyinrelationtoanothershiftsaccordingly.Noothermarketencompasses(anddistills)asmuchofwhatisgoingonintheworldatanygiventimeasforeignexchange.[74]

Supplyanddemandforanygivencurrency,andthusitsvalue,arenotinfluencedbyanysingleelement,butratherbyseveral.Theseelementsgenerallyfallintothreecategories:economicfactors,politicalconditionsandmarketpsychology.

Economicfactors

Theseinclude:(a)economicpolicy,disseminatedbygovernmentagenciesandcentralbanks,(b)economicconditions,generallyrevealedthrougheconomicreports,andothereconomicindicators.

Economicpolicycomprisesgovernmentfiscalpolicy(budget/spendingpractices)andmonetarypolicy(themeansbywhichagovernment'scentralbankinfluencesthesupplyand"cost"ofmoney,whichisreflectedbythelevelofinterestrates).Governmentbudgetdeficitsorsurpluses:Themarketusuallyreactsnegativelytowideninggovernmentbudgetdeficits,andpositivelytonarrowingbudgetdeficits.Theimpactisreflectedinthevalueofacountry'scurrency.Balanceoftradelevelsandtrends:Thetradeflowbetweencountriesillustratesthedemandforgoodsandservices,whichinturnindicatesdemandforacountry'scurrencytoconducttrade.Surplusesanddeficitsintradeofgoodsandservicesreflectthecompetitivenessofanation'seconomy.Forexample,tradedeficitsmayhaveanegativeimpactonanation'scurrency.Inflationlevelsandtrends:Typicallyacurrencywilllosevalueifthereisahighlevelofinflationinthecountryorifinflationlevelsareperceivedtoberising.Thisisbecauseinflationerodespurchasingpower,thusdemand,forthatparticularcurrency.However,acurrencymaysometimesstrengthenwheninflationrisesbecauseofexpectationsthatthecentralbankwillraiseshortterminterestratestocombatrisinginflation.Economicgrowthandhealth:ReportssuchasGDP,employmentlevels,retailsales,capacityutilizationandothers,detailthelevelsofacountry'seconomicgrowthandhealth.Generally,themorehealthyandrobustacountry'seconomy,thebetteritscurrencywillperform,andthemoredemandforittherewillbe.Productivityofaneconomy:Increasingproductivityinaneconomyshouldpositivelyinfluencethevalueofitscurrency.Itseffectsaremoreprominentiftheincreaseisinthetradedsector.[75]

Politicalconditions

Internal,regional,andinternationalpoliticalconditionsandeventscanhaveaprofoundeffectoncurrencymarkets.

Allexchangeratesaresusceptibletopoliticalinstabilityandanticipationsaboutthenewrulingparty.Politicalupheavalandinstabilitycanhaveanegativeimpactonanation'seconomy.Forexample,destabilizationofcoalitiongovernmentsinPakistanandThailandcannegativelyaffectthevalueoftheir



currencies.Similarly,inacountryexperiencingfinancialdifficulties,theriseofapoliticalfactionthatisperceivedtobefiscallyresponsiblecanhavetheoppositeeffect.Also,eventsinonecountryinaregionmayspurpositive/negativeinterestinaneighboringcountryand,intheprocess,affectitscurrency.

Marketpsychology

Marketpsychologyandtraderperceptionsinfluencetheforeignexchangemarketinavarietyofways:

Flightstoquality:Unsettlinginternationaleventscanleadtoa"flighttoquality",atypeofcapitalflightwherebyinvestorsmovetheirassetstoaperceived"safehaven".Therewillbeagreaterdemand,thusahigherprice,forcurrenciesperceivedasstrongerovertheirrelativelyweakercounterparts.TheUSdollar,Swissfrancandgoldhavebeentraditionalsafehavensduringtimesofpoliticaloreconomicuncertainty.[76]Longtermtrends:Currencymarketsoftenmoveinvisiblelongtermtrends.Althoughcurrenciesdonothaveanannualgrowingseasonlikephysicalcommodities,businesscyclesdomakethemselvesfelt.Cycleanalysislooksatlongertermpricetrendsthatmayrisefromeconomicorpoliticaltrends.[77]"Buytherumor,sellthefact":Thismarkettruismcanapplytomanycurrencysituations.Itisthetendencyforthepriceofacurrencytoreflecttheimpactofaparticularactionbeforeitoccursand,whentheanticipatedeventcomestopass,reactinexactlytheoppositedirection.Thismayalsobereferredtoasamarketbeing"oversold"or"overbought".[78]Tobuytherumororsellthefactcanalsobeanexampleofthecognitivebiasknownasanchoring,wheninvestorsfocustoomuchontherelevanceofoutsideeventstocurrencyprices.Economicnumbers:Whileeconomicnumberscancertainlyreflecteconomicpolicy,somereportsandnumberstakeonatalismanlikeeffect:thenumberitselfbecomesimportanttomarketpsychologyandmayhaveanimmediateimpactonshorttermmarketmoves."Whattowatch"canchangeovertime.Inrecentyears,forexample,moneysupply,employment,tradebalancefiguresandinflationnumbershavealltakenturnsinthespotlight.Technicaltradingconsiderations:Asinothermarkets,theaccumulatedpricemovementsinacurrencypairsuchasEUR/USDcanformapparentpatternsthattradersmayattempttouse.Manytradersstudypricechartsinordertoidentifysuchpatterns.[79]

Financialinstruments

Spot

Aspottransactionisatwodaydeliverytransaction(exceptinthecaseoftradesbetweentheUSdollar,Canadiandollar,Turkishlira,euroandRussianruble,whichsettlethenextbusinessday),asopposedtothefuturescontracts,whichareusuallythreemonths.Thistraderepresentsadirectexchangebetweentwocurrencies,hastheshortesttimeframe,involvescashratherthanacontract,andinterestisnotincludedintheagreedupontransaction.SpottradingisoneofthemostcommontypesofForexTrading.Often,aforexbrokerwillchargeasmallfeetotheclienttorollovertheexpiringtransactionintoanewidenticaltransactionforacontinuumofthetrade.Thisrolloverfeeisknownasthe"Swap"fee.

Forward

Onewaytodealwiththeforeignexchangeriskistoengageinaforwardtransaction.Inthistransaction,moneydoesnotactuallychangehandsuntilsomeagreeduponfuturedate.Abuyerandselleragreeonanexchangerateforanydateinthefuture,andthetransactionoccursonthatdate,regardlessofwhatthemarketratesarethen.Thedurationofthetradecanbeoneday,afewdays,monthsoryears.Usuallythedateisdecidedbybothparties.Thentheforwardcontractisnegotiatedandagreeduponbybothparties.



Swap

Themostcommontypeofforwardtransactionistheforeignexchangeswap.Inaswap,twopartiesexchangecurrenciesforacertainlengthoftimeandagreetoreversethetransactionatalaterdate.Thesearenotstandardizedcontractsandarenottradedthroughanexchange.Adepositisoftenrequiredinordertoholdthepositionopenuntilthetransactioniscompleted.

Futures

Futuresarestandardizedforwardcontractsandareusuallytradedonanexchangecreatedforthispurpose.Theaveragecontractlengthisroughly3months.Futurescontractsareusuallyinclusiveofanyinterestamounts.

Currencyfuturescontractsarecontractsspecifyingastandardvolumeofaparticularcurrencytobeexchangedonaspecificsettlementdate.Thusthecurrencyfuturescontractsaresimilartoforwardcontractsintermsoftheirobligation,butdifferfromforwardcontractsinthewaytheyaretraded.TheyarecommonlyusedbyMNCstohedgetheircurrencypositions.Inadditiontheyaretradedbyspeculatorswhohopetocapitalizeontheirexpectationsofexchangeratemovements.

Option

Aforeignexchangeoption(commonlyshortenedtojustFXoption)isaderivativewheretheownerhastherightbutnottheobligationtoexchangemoneydenominatedinonecurrencyintoanothercurrencyatapreagreedexchangerateonaspecifieddate.TheFXoptionsmarketisthedeepest,largestandmostliquidmarketforoptionsofanykindintheworld.

Speculation

Controversyaboutcurrencyspeculatorsandtheireffectoncurrencydevaluationsandnationaleconomiesrecursregularly.EconomistsincludingMiltonFriedmanhavearguedthatspeculatorsultimatelyareastabilizinginfluenceonthemarket,andthatstabilizingspeculationperformstheimportantfunctionofprovidingamarketforhedgersandtransferringriskfromthosepeoplewhodon'twishtobearit,tothosewhodo.[80]Othereconomists,suchasJosephStiglitz,considerthisargumenttobebasedmoreonpoliticsandafreemarketphilosophythanoneconomics.[81]

Largehedgefundsandotherwellcapitalized"positiontraders"arethemainprofessionalspeculators.Accordingtosomeeconomists,individualtraderscouldactas"noisetraders"andhaveamoredestabilizingrolethanlargerandbetterinformedactors.[82]Alsotobeconsideredistheriseinforeignexchangeautotradingalgorithmic,orautomated,tradinghasincreasedfrom2%in2004upto45%in2010.[83]

Currencyspeculationisconsideredahighlysuspectactivityinmanycountries.Whileinvestmentintraditionalfinancialinstrumentslikebondsorstocksoftenisconsideredtocontributepositivelytoeconomicgrowthbyprovidingcapital,currencyspeculationdoesnotaccordingtothisview,itissimplygamblingthatofteninterfereswitheconomicpolicy.Forexample,in1992,currencyspeculationforcedtheCentralBankofSwedentoraiseinterestratesforafewdaysto500%perannum,andlatertodevaluethekrona.[84]MahathirMohamad,oneoftheformerPrimeMinistersofMalaysia,isonewellknownproponentofthisview.HeblamedthedevaluationoftheMalaysianringgitin1997onGeorgeSorosandotherspeculators.



Fig.1ChartshowingMSCIWorldIndexofEquitiesfellwhiletheUSdollarIndexrose.

GregoryMillmanreportsonanopposingview,comparingspeculatorsto"vigilantes"whosimplyhelp"enforce"internationalagreementsandanticipatetheeffectsofbasiceconomic"laws"inordertoprofit.[85]

Inthisview,countriesmaydevelopunsustainablefinancialbubblesorotherwisemishandletheirnationaleconomies,andforeignexchangespeculatorsmadetheinevitablecollapsehappensooner.Arelativelyquickcollapsemightevenbepreferabletocontinuedeconomicmishandling,followedbyaneventual,larger,collapse.MahathirMohamadandothercriticsofspeculationareviewedastryingtodeflecttheblamefromthemselvesforhavingcausedtheunsustainableeconomicconditions.

Riskaversion

Riskaversionisakindoftradingbehaviorexhibitedbytheforeignexchangemarketwhenapotentiallyadverseeventhappenswhichmayaffectmarketconditions.Thisbehavioriscausedwhenriskaversetradersliquidatetheirpositionsinriskyassetsandshiftthefundstolessriskyassetsduetouncertainty.[86]

Inthecontextoftheforeignexchangemarket,tradersliquidatetheirpositionsinvariouscurrenciestotakeuppositionsinsafehavencurrencies,suchastheUSdollar.[87]Sometimes,thechoiceofasafehavencurrencyismoreofachoicebasedonprevailingsentimentsratherthanoneofeconomicstatistics.AnexamplewouldbetheFinancialCrisisof2008.ThevalueofequitiesacrosstheworldfellwhiletheUSdollarstrengthened(seeFig.1).ThishappeneddespitethestrongfocusofthecrisisintheUSA.[88]

Carrytrade

Currencycarrytradereferstotheactofborrowingonecurrencythathasalowinterestrateinordertopurchaseanotherwithahigherinterestrate.Alargedifferenceinratescanbehighlyprofitableforthetrader,especiallyifhighleverageisused.However,withallleveredinvestmentsthisisadoubleedgedsword,andlargeexchangeratepricefluctuationscansuddenlyswingtradesintohugelosses.

Forexsignals

Forextradealerts,oftenreferredtoas"forexsignals",aretradestrategiesprovidedbyeitherexperiencedtradersormarketanalysts.Thesesignalswhichareoftenchargedapremiumfeeforcanthenbecopiedorreplicatedbyatradertohisownliveaccount.Forexsignalproductsarepackagedaseitheralertsdeliveredtoauser'sinboxorSMS,orcanbeinstalledtoatrader'stradingplatforms.Algorithmictrading,wherebyforeignexchangeuserscanprogramme(orbuyreadymadesoftware)toplacetradesontheirbehalf,accordingtopredeterminedruleshasbecomeverypopularinrecentyears.Thismeansthatuserscansettheir'Algos'totradeontheirbehalf,thusreducingtheneedtositandmonitorthemarketscontinuously,plusitcanremovetheelementofhumanemotionaroundexecutingatrade.

Seealso

BalanceoftradeCurrencycodes

ForeignexchangecontrolsForeignexchangehedge

MoneymarketNonfarmpayrolls



CurrencystrengthForeigncurrencymortgage

ForeignexchangereservesForeignexchangederivative

TobintaxWorldcurrency

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40. (SFOMagazine,RRWasendorf,Jr.)(INT)ForexTradingPARosenstreichTheEvolutionofFXandEmergingMarkets(http://books.google.co.uk/books?id=Tylr_uaXKgC&pg=PT42&dq=history+of+forex&hl=en&sa=X&ei=sYAAUOGbJYuY0QXM1dm3Bw&ved=0CEYQ6AEwAjgK#v=onepage&q=history%20of%20forex&f=false)TradersPress,30June2009Retrieved13July2012ISBN1934354104

41. JJagerson,SWHansenAllAboutForexTrading(http://books.google.co.uk/books?id=CC2p5Jsg3icC&pg=PA16&dq=history+of+forex&hl=en&sa=X&ei=fYEAUNPtItCV0QXSzLzABw&ved=0CFEQ6AEwBDgK#v=onepage&q=history%20of%20forex&f=false)McGrawHillProfessional,17June2011Retrieved13July2012ISBN007176822X

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51. "...forcedtocloseforseveraldaysinmid1972,...Theforeignexchangemarketswereclosedagainontwooccasionsatthebeginningof1973,.."inHJRstowNewpathstofullemployment:thefailureoforthodoxeconomictheoryMacmillan,1991Retrieved15July2012[4](https://www.google.co.uk/search?tbm=bks&hl=en&q=the+foreign+exchange+markets+were+forced+to+close+from+February+of+1972+to+March+of+1973&btnG=#hl=en&tbm=bks&sclient=psyab&q=the+foreign+exchange+markets++forced+to+close+1972++1973&oq=the+foreign+exchange+markets++forced+to+close+1972++1973&gs_l=serp.12...4375.4375.2.4999.1.1.0.0.0.0.396.396.31.1.0...0.0...1c.SRSBQ_o0Ek&pbx=1&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.,cf.osb&fp=e1175ee4201d696b&biw=1280&bih=845)

52. JChenEssentialsofForeignExchangeTrading(http://books.google.co.uk/books?id=8zTsnBYiDGkC&pg=PA1&dq=history+of+foreign+exchange&hl=en&sa=X&ei=SKYAUNKqII6o0AWV3KSGBw&redir_esc=y#v=onepage&q=history%20of%20foreign%20exchange&f=false)JohnWiley&Sons,9March2009Retrieved13July2012ISBN0470390867

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53. (page1of)AHicksManagingCurrencyRiskUsingForeignExchangeOptions(http://books.google.co.uk/books?id=vIuavf6a1R8C&pg=PA1&dq=history+of+Foreign+exchange&hl=en&sa=X&ei=wcIBUIy5J6O_0QW28SLBw&ved=0CEQQ6AEwAg#v=onepage&q=history%20of%20Foreign%20exchange&f=false)WoodheadPublishing,2000Retrieved14July2012ISBN1855734915

54. (secondary)GGJohnsonFormulationofExchangeRatePoliciesinAdjustmentPrograms(http://books.google.co.uk/books?id=8FQWkffo7wwC&pg=PA15&dq=foreign+exchange+1982&hl=en&sa=X&ei=nsQBUPO1JunN0QXLi9CuBw&ved=0CHUQ6AEwCQ#v=onepage&q=foreign%20exchange%201982&f=false)InternationalMonetaryFund,15August1985Retrieved14July2012ISBN0939934507

55. JADornChinaintheNewMillennium:MarketReformsandSocialDevelopment(http://books.google.co.uk/books?id=BIGnLYA4PtsC&pg=PA208&dq=foreign+exchange+in+1981&hl=en&sa=X&ei=A9kBUIm2MOmo0AXmloiSBw&ved=0CFgQ6AEwBTgK#v=onepage&q=foreign%20exchange%20in%201981&f=false)CatoInstitute,1998Retrieved14July2012ISBN1882577612

56. BLaurens,HMehran,MQuintyn,TNordmanMonetaryandExchangeSystemReformsinChina:AnExperimentinGradualism(http://books.google.co.uk/books?id=PJwCbEC9lJYC&pg=PT131&dq=foreign+exchange+in+1981&hl=en&sa=X&ei=59cBUMfYLIKf0QWA4vSuBw&ved=0CGwQ6AEwCA#v=onepage&q=foreign%20exchange%20in%201981&f=false)InternationalMonetaryFund,26September1996Retrieved14July2012ISBN1452766126

57. YIChungSouthKoreaintheFastLane:EconomicDevelopmentandCapitalFormation(http://books.google.co.uk/books?id=0n9n3vNMeYC&pg=PA106&dq=foreign+exchange+in+1981&hl=en&sa=X&ei=zNUBUNbPLKXB0QXpjejHBw&redir_esc=y#v=onepage&q=foreign%20exchange%20in%201981&f=false)OxfordUniversityPress,20July2007Retrieved14July2012ISBN0195325451

58. KMDominguez,JAFrankelDoesForeignExchangeInterventionWork?(http://books.google.co.uk/books?id=i6QViZToLTIC&pg=PA9&dq=history+of+foreign+exchange+1983&hl=en&sa=X&ei=5csBUKGvE8mw0QW_kq24Bw&ved=0CEcQ6AEwAjgK#v=onepage&q=history%20of%20foreign%20exchange%201983&f=false)PetersonInstitute,1993Retrieved14July2012ISBN0881321044

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67. AlanGreenspan,TheRootsoftheMortgageCrisis:Bubblescannotbesafelydefusedbymonetarypolicybeforethespeculativefeverbreaksonitsown.(http://opinionjournal.com/editorial/feature.html?id=110010981),theWallStreetJournal,12December2007

68. McKay,PeterA.(26July2005)."ScammersOperatingonPeripheryOfCFTC'sDomainLureLittleGuyWithFantasticPromisesofProfits"(http://online.wsj.com/article/SB112233850336095645.html?mod=MarketsMain).TheWallStreetJournal(DowJonesandCompany).Retrieved31October2007.

69. Egan,Jack(19June2005)."ChecktheCurrencyRisk.ThenMultiplyby100"(http://www.nytimes.com/2005/06/19/business/yourmoney/19fore.html?



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