Foreign Exchange Maret

Checkpoint: Foreign Exchange Market

Jessica Price

August 6, 2012

INB\205

Instructor: Anthony Brooks

Axia College of University of Phoenix

Gold has started many wars between friends and countries since it was first discovered. Gold has been a form a currency that has been recognized by all people and countries. The price of gold has continue to go up since from A.D. 1200. Gold has other uses than as a form of currencies like making jewelry and in dentistry. In India it is part of a dowry at a wedding where about $500 worth is given.

To begin we have to be able to understand the role of the foreign exchange markets in international business. The foreign exchange market is all so known as FOREX. When talked about by Ball, McCullough,Franz, Geringer, and Minor they are quoted saying FOREX is a place where monies can be bought,borrowed,or sold. There many place that have FOREX locations but the major ones are in London, New York, Tokyo, and Singapore. The FOREX like said before is a place where countries can purchase, borrow, or sell their own currency to members of other countries. FOREX is the there to provide resources to countries to make payments and transfer funds across borders and also provides purchasing power from one currency to another. When dealing with exchange rates between two countries, they are dependent on official or private participants to buy and sell currency to maintain authorized pegged rate. When dealing with the FOREX is a point to remember that exchange rates are set by the market and not by governments and that is why it is called floating currency exchange rate. There many other things that determine the exchange rate like purchasing power parity(PPP) theory that states that the exchange rates in the long run will adjust to equalize the purchasing power of differing currencies. This just make products that are in competitive markets sell for the same price when they are valued in the same currencies. The PPP also has to look...