THE FOREIGN EXCHANGE MARKET AND PARITY CONDITIONS

Suk H. Kim

Chapter 4 in Global Corporate Finance:A Focused Approach, 2023, pp 77-109 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The efficient operation of the international monetary system has necessitated the creation of an institutional structure, usually called the foreign exchange market. This is a market where one country’s currency can be exchanged for another country’s. Contrary to what the term might suggest, the foreign exchange market actually is not a geographic location. It is an informal network of telephone, telex, satellite, facsimile, and computer communications between banks, foreign exchange dealers, arbitrageurs, and speculators. The market operates simultaneously at three tiers:1. Individuals and corporations buy and sell foreign exchange through their commercial banks.2. Commercial banks trade in foreign exchange with other commercial banks in the same financial center.3. Commercial banks trade in foreign exchange with commercial banks in other financial centers.

Keywords: Global Finance; International Finance; International Financial Management; International Accounting; International Business; International Business Finance; Foreign Trade; International Economics; Foreign Exchange; International Corporate Finance; Multinational Finance; International Taxation (search for similar items in EconPapers)
JEL-codes: F F21 F23 F3 F30 F31 G3 (search for similar items in EconPapers)
Date: 2023
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