Forex

PHILIPPINE FOREIGN EXCHANGE MARKET

• Maintains a floating exchange rate

FOREIGN CURRENCY EXCHANGE MARKET

• Provides a service to individual, business and governments who need to buy or sell currencies other than that used in their country.

• Also a marketplace in which currencies are bought and sold purely to make profit via speculation.

EXCHANGE RATE

• Price of a unit of foreign currency.

INFLATION

• Tends to deflate the value of a currency

BALANCE OF PAYMENTS

• System of accounts that catalogs the flow of goods between the residents of two countries.

GOVERNMENT INTERVENTION

• The central bank of a country may support or depress the value of its currency

SPOT TRANSACTION

• Represent the bulk of the foreign exchange transaction

• The most common foreign exchange transaction done in these market.

FOREIGN EXCHANGE FORWARD CONTRACTS

• a commitment to buy one currency against another currency

SNAP CONTRACTS

• Like forward contracts

• An arrangement between two or more parties where cash flow is exchange in two different currencies based on agreed national amount and maturity.

PDS - Philippine Dealing System

• Are based on prevailing foreign exchange rate and vary from time to time.

FOREIGN EXCHANGE RATE

• Refers to the possibility of a drop in revenue or an increase in cost in an international transaction due to a change in foreign exchange rates.