Under the theory of parity of a purchase power (ППС) the goods price in one country should be to the equal price of the same goods in other country in recalculation on an exchange rate, i.e. the uniform price law should be carried out. Two versions of theory ППС – absolute and relative are known. According to the absolute version, the exchange rate is defined simply by a parity of an overall price level of two countries which represents the average value of the price of all goods made in the country. This version is applicable for a case when there is a possibility to allocate two countries, making and consuming the identical goods. Besides it, at the absolute version a cost of transportation and expenses on overcoming of trading barriers are not considered. Actually, a cost of transportation is usually enough considerable and are not identical in the different countries. Trading barriers for the present safely exist and are sometimes obvious, and sometimes and hidden and essentially influence cost and distribution of the goods. At last, at this version importance of trade marks is not considered. For example, the car get, being guided not only by its lowest cost from all cars of an identical class, but considering as well the firm-manufacturer name («You are what you drive» – «Tell to me by what you go, and I will tell, who you»).
According to relative version ППС, exchange rate change in percentage during the certain base period should be equal to a difference between changes in percentage a price level in the given country and abroad. Relative version ППС also is not free from lacks, somehow:
(1) complexity or ambiguity of definition of the base period,
(2) as well as at the absolute version, trading restrictions are not considered,
(3) averaging of the prices at calculations of their indexes and presence of the different goods in indexes complicate their comparison, and in long-term prospect of a parity of the internal prices of the given country can change, causing a deviation of an exchange rate from what is defined on relative ППС.
At last, the exchange rate in the market of spots changes irrespective of the relation of the internal and foreign prices, being subject to influence of financial conditions and other factors which are not concerning the commodity market.
суббота, 14 августа 2010 г.
Consent Systems
Unlike дилинговых systems at which trade is not anonymous and it is carried out on an individual basis, согласующие systems are anonymous, and separate traders вступаюбт in transactions with all other market just as it occurs in the broker market. However unlike the broker market, thus there are no the physical persons optimising the prices, and liquidity can be limited in time. Soglasujushchie systems well approach also trading in small volumes.
Such advantages дилинговых systems as speed, reliability and safety are inherent in soglasujushchim systems. Besides, these systems automatically operate demand lines of credit. Traders request all demand line of credit of each partner. At data acquisition about the demand line of credit the system automatically blocks the conclusion of the transaction with the separate partner at detection of credit restrictions or shows to the trader of the price of those banks which have open demand lines of credit. As soon as the demand line of credit is restored, the system again allows bank to make transactions. In the interbank market traders trade directly with дилинговыми systems, согласующими systems and brokers by a principle of their mutual addition.
Such advantages дилинговых systems as speed, reliability and safety are inherent in soglasujushchim systems. Besides, these systems automatically operate demand lines of credit. Traders request all demand line of credit of each partner. At data acquisition about the demand line of credit the system automatically blocks the conclusion of the transaction with the separate partner at detection of credit restrictions or shows to the trader of the price of those banks which have open demand lines of credit. As soon as the demand line of credit is restored, the system again allows bank to make transactions. In the interbank market traders trade directly with дилинговыми systems, согласующими systems and brokers by a principle of their mutual addition.
Direct dealing
Direct dealing is based on trading reciprocity. The participant of the currency market – the bank establishing or declaring the prices, - assumes that other bank which has addressed to it will reciprocate, установливая the price when to it will address. Direct dealing provides the big freedom of action at trade in comparison with dealing in the broker market. Sometimes traders take from this certain benefits.
Direct dealing was carried out earlier basically by phone. Errors at transactions were difficult for establishing thus and even more difficultly to eliminate. With commissioning in the mid-eighties дилинговых systems direct dealing has undergone basic changes. Dilingovye systems are represented by the computers working on the Internet, connecting banks-participants of the whole world with granting to each of them of the personal terminal. These systems differ in the speed, reliability and safety. Dilingovye systems are constantly improved for the purpose of maintenance of the greatest possible support at performance by the dealer of trading functions. The software is rather reliable for perception of long figures of exchange rates and standard sizes. Besides, it provides a faultlessness and speed at a communication establishment between partners, switching of interlocutors and the reference to databases. The trader is in constant visual contact to the information changing on the monitor. It is more convenient to see this information, than to hear, especially at switchings during conversations.
Many banks use the combined services of brokers and дилинговых systems. Both ways are applicable to the same banks, but not to same парнерам as, for example, corporations cannot carry out the transaction in the broker market. Traders establish in the market a personal contact both with brokers, and with traders, but choose trading intermediaries, proceeding from the offered prices, instead of personal sympathies. Therefore the parity in the market between дилинговыми systems and brokers fluctuates depending on concrete conditions. For quickly changing conditions approach дилинговые systems while under usual conditions services of brokers are preferable more.
Direct dealing was carried out earlier basically by phone. Errors at transactions were difficult for establishing thus and even more difficultly to eliminate. With commissioning in the mid-eighties дилинговых systems direct dealing has undergone basic changes. Dilingovye systems are represented by the computers working on the Internet, connecting banks-participants of the whole world with granting to each of them of the personal terminal. These systems differ in the speed, reliability and safety. Dilingovye systems are constantly improved for the purpose of maintenance of the greatest possible support at performance by the dealer of trading functions. The software is rather reliable for perception of long figures of exchange rates and standard sizes. Besides, it provides a faultlessness and speed at a communication establishment between partners, switching of interlocutors and the reference to databases. The trader is in constant visual contact to the information changing on the monitor. It is more convenient to see this information, than to hear, especially at switchings during conversations.
Many banks use the combined services of brokers and дилинговых systems. Both ways are applicable to the same banks, but not to same парнерам as, for example, corporations cannot carry out the transaction in the broker market. Traders establish in the market a personal contact both with brokers, and with traders, but choose trading intermediaries, proceeding from the offered prices, instead of personal sympathies. Therefore the parity in the market between дилинговыми systems and brokers fluctuates depending on concrete conditions. For quickly changing conditions approach дилинговые systems while under usual conditions services of brokers are preferable more.
пятница, 13 августа 2010 г.
Trade through brokers
Brokers on Forex, unlike brokers in the commodity market, do not open own positions, and only serve clients. Their role is reduced reducing the buyer with the seller in the market, to optimise the declared price and operatively, precisely and fairly to carry out the demand of the trader.
At trade through the broker the majority of currency transactions is carried out on system «open tribune» (open box system), representing a microphone facing the broker, constantly broadcasting everything that it or she speaks, on a direct telephone line on a workplace of serving bank. Thanks to it all banks can learn about all carried out transactions. Thanks to the same system of an open tribune the trader in a condition to learn about the declared prices, about purchases and sales and at what prices they are made. That the trader cannot learn is about volumes of purchases and sales and names of the banks which have declared the prices. The prices are anonymous. Anonymity of the banks trading in the market, provides efficiency of the market as all banks participate in trade on an equal footing. Sometimes brokers receive commission fee which the buyer and the seller fifty-fifty pay. The size of commission fee is contractual and is established by bank for broker firm individually.
Brokers declare to the clients of the price of other clients in bilaterial (purchase and sale) or in unilateral (purchase or sale) a kind. Traders declare the different prices as they on a miscellaneous "read" the market, at them different intentions and different interests. The broker at whom more than one price from one or two parties, will automatically optimise the price. In other words, the broker will always show the highest for the client the purchase price (bid) and the lowest price of sale (offer or ask). Thus, the market provides an optimum difference (spread) these prices.
The fundamental and technical analysis is applied to forecasting of movement of the prices. The trader has possibility to check up the market, having made purchase in small volume and to look, whether there is on it any reaction.
Other advantage of the broker market is that the broker has possibility to provide for the client wider choice of banks. Some European and Asian banks work in night shifts so demands arriving to them can be told the brokers connected with the American banks that increases liquidity of the market.
At trade through the broker the majority of currency transactions is carried out on system «open tribune» (open box system), representing a microphone facing the broker, constantly broadcasting everything that it or she speaks, on a direct telephone line on a workplace of serving bank. Thanks to it all banks can learn about all carried out transactions. Thanks to the same system of an open tribune the trader in a condition to learn about the declared prices, about purchases and sales and at what prices they are made. That the trader cannot learn is about volumes of purchases and sales and names of the banks which have declared the prices. The prices are anonymous. Anonymity of the banks trading in the market, provides efficiency of the market as all banks participate in trade on an equal footing. Sometimes brokers receive commission fee which the buyer and the seller fifty-fifty pay. The size of commission fee is contractual and is established by bank for broker firm individually.
Brokers declare to the clients of the price of other clients in bilaterial (purchase and sale) or in unilateral (purchase or sale) a kind. Traders declare the different prices as they on a miscellaneous "read" the market, at them different intentions and different interests. The broker at whom more than one price from one or two parties, will automatically optimise the price. In other words, the broker will always show the highest for the client the purchase price (bid) and the lowest price of sale (offer or ask). Thus, the market provides an optimum difference (spread) these prices.
The fundamental and technical analysis is applied to forecasting of movement of the prices. The trader has possibility to check up the market, having made purchase in small volume and to look, whether there is on it any reaction.
Other advantage of the broker market is that the broker has possibility to provide for the client wider choice of banks. Some European and Asian banks work in night shifts so demands arriving to them can be told the brokers connected with the American banks that increases liquidity of the market.
среда, 11 августа 2010 г.
Spot-course
The price of currency of one country, expressed in currency of other country, established at the moment of the transaction conclusion, under condition of currency swap by banks-counterparts for the second working day from the date of the transaction conclusion. The Spot-course reflects, the national currency at the moment of carrying out of operation outside of the given country is how much highly estimated.
FOREX (Foreign Exchange) – the international exchange. Reduced designation FX
USD – the American dollar
The basic currencies (majors)
EUR = ECU – the international European currency-euro (экю)
USD – (the American dollar)
GBP = STG (sterling)
CHF = SWF (the Swiss franc, swissie)
JPY = YEN (Japanese yen)
Ministers of Finance of the countries of the European Union declared courses of converting of currencies of 11 countries in new general currency – euro.
Since 0.00 on the European time on January, 1st, 1999 euro became official currency for 11 EU countries though banknotes and coins will not appear in circulation till 2002.
Great Britain, Sweden, Denmark and Greece do not participate in converting.
Ministers declared following courses of converting:
DM – 1.95583
The French franc – 6.55957
Italian lira – 1936.21
Peseta – 166.386
Portuguese escudo – 200.482
The Finnish mark – 5.94573
Irish pound – 0.787564
Belgian/Luxembourg franc – 40.3399
The Dutch gulden – 2.20371
The Austrian shilling – 13.7603
The financial institutions constantly carrying out the quotations of courses of purchase and sale of various currencies and entering the transactions on them, are called as markets-makers (market-maker) – 20 % of the world banks which are carrying out to 60 % of volume of all transactions.
The financial institutions which are carrying out inquiry of cost of currencies, - markets-users (market-user).
The quotation of offered currency looks as follows:
USD/CHF = 1,7050/60
It means that the trader can buy dollars for the Swiss francs at the rate of 1,7060, and sell dollar for the Swiss francs at the rate of 1,7050.
1,7050 – бид (bid); 1,7060 – аск (ask).
The point (point) is minimum change of the price (pips) – 1,7055 – 5 pips.
Spread (spread) – a difference between the price of purchase and by sale: 1,7060 – 1,7050 = 10 pts points (a standard bank spread from 5 to 10 pts).
1,7060 – 1,70 – big figure (the big figure).
Hedge (fence) – insurance upon currency risks.
FOREX (Foreign Exchange) – the international exchange. Reduced designation FX
USD – the American dollar
The basic currencies (majors)
EUR = ECU – the international European currency-euro (экю)
USD – (the American dollar)
GBP = STG (sterling)
CHF = SWF (the Swiss franc, swissie)
JPY = YEN (Japanese yen)
Ministers of Finance of the countries of the European Union declared courses of converting of currencies of 11 countries in new general currency – euro.
Since 0.00 on the European time on January, 1st, 1999 euro became official currency for 11 EU countries though banknotes and coins will not appear in circulation till 2002.
Great Britain, Sweden, Denmark and Greece do not participate in converting.
Ministers declared following courses of converting:
DM – 1.95583
The French franc – 6.55957
Italian lira – 1936.21
Peseta – 166.386
Portuguese escudo – 200.482
The Finnish mark – 5.94573
Irish pound – 0.787564
Belgian/Luxembourg franc – 40.3399
The Dutch gulden – 2.20371
The Austrian shilling – 13.7603
The financial institutions constantly carrying out the quotations of courses of purchase and sale of various currencies and entering the transactions on them, are called as markets-makers (market-maker) – 20 % of the world banks which are carrying out to 60 % of volume of all transactions.
The financial institutions which are carrying out inquiry of cost of currencies, - markets-users (market-user).
The quotation of offered currency looks as follows:
USD/CHF = 1,7050/60
It means that the trader can buy dollars for the Swiss francs at the rate of 1,7060, and sell dollar for the Swiss francs at the rate of 1,7050.
1,7050 – бид (bid); 1,7060 – аск (ask).
The point (point) is minimum change of the price (pips) – 1,7055 – 5 pips.
Spread (spread) – a difference between the price of purchase and by sale: 1,7060 – 1,7050 = 10 pts points (a standard bank spread from 5 to 10 pts).
1,7060 – 1,70 – big figure (the big figure).
Hedge (fence) – insurance upon currency risks.
Cross-countries-courses
Cross-countries-courses are a parity between two currencies which follows from their course in relation to a course of the third currency. At operations in the world market cross-countries-courses with US dollar as the US dollar is not only the basic reserve currency, but also transaction currency in the majority of currency transactions are often used.
DEM/CHF, GBP/DEM
All calculations at the cross-countries-courses, connected on dollar, are defined by division
DEM/CHF = USD/CHF: USD/DEM
All calculations on cross-country to the courses, connected with pound sterling, are defined by multiplication
GBP/DEM = GBP/USD ґ USD/DEM
DEM/CHF, GBP/DEM
All calculations at the cross-countries-courses, connected on dollar, are defined by division
DEM/CHF = USD/CHF: USD/DEM
All calculations on cross-country to the courses, connected with pound sterling, are defined by multiplication
GBP/DEM = GBP/USD ґ USD/DEM
Role of Federal reserve system of the USA and the central banks of other countries «Big seven» on Forex
All central banks including Federal reserve system of the USA (ФРС) influence the currency market by means of change of discount rates and carrying out of currency transactions (interventions and currency purchases).
From currency transactions by the most essential to Forex agreements on the return repayment (repurchase agreements), providing return sale by system of the same currencies bought earlier at clients at the same price during caused time in the future (usually within 15 days) and with the certain interest rate are. The transaction volume under such agreement corresponds to volume of time injection of reserves in bank system. Influence on the currency market is carried out to weaken the currency. The agreement on the return repayment can impose obligations either on the client, or on bank (ФРС).
The co-ordinated contracts about purchase and sale (matched sale-purchase agreements) are opposite to agreements on the return repayment. Carrying out the co-ordinated contract on purchase and sale, bank or ФРС sells currency for the purpose of its immediate delivery to the dealer or foreign central bank, agreeing to redeem this currency back at the same price during caused time in the future (usually within 7 days). Such contract is directed on temporary dump of reserves. The transaction volume under such agreement corresponds to volume of time dump of reserves. Influence on the market is directed thus on strengthening the currency.
Placing of money concerns number of currency transactions in other central banks or международнх funds. Besides, ФРС, since 1962г., has concluded a number of agreements with other central banks about a currency exchange. For example, for rendering assistance to allies on war on clearing of Kuwait of the Iraq occupation in 1990-1991гг. Бундесбанк and Japanese bank placed money in ФРС. Through other central banks the American payments in the World bank and the United Nations Organization т.п are made.
Interventions in the currency market from exchequer and ФРС are directed on orderliness maintenance in the market or regulation of exchange rates. They are not directed on influencing a condition of financial reserves.
Two kinds of currency interventions are known: barefaced (naked intervention) and sterile (sterilised).
Barefaced, or unsterile intervention is connected exclusively with currency trade. Everything that occurs thus, is a purchase or sale by Federal system of dollars for foreign currency. Besides influence on the currency market, change of a financial situation because of inflow or outflow of money thus takes place. Appreciable change of financial streams causes to correct the size of payments under dividends, to change the prices and to make other amendments at all levels of economy. Therefore influence of barefaced currency intervention is long-term.
Sterile intervention is neutral, from the point of view of its influence on monetary receipts. As not many central banks feel desire that their interventions in the currency markets вляли on all parties of economy, sterile intervention is preferable. The same concerns and Federal reserve system. Sterile intervention includes an additional measure within the limits of the initial currency transaction. This measure consists in the sale of the state securities compensating a gain of reserves because of intervention. It is easier for understanding if to imagine that the central bank intends to finance the currency transaction at the expense of sale of certain quantity of the state securities. As sterile intervention influences only a level of demand and offers of separate currency, its effect is short-term or intermediate term.
From currency transactions by the most essential to Forex agreements on the return repayment (repurchase agreements), providing return sale by system of the same currencies bought earlier at clients at the same price during caused time in the future (usually within 15 days) and with the certain interest rate are. The transaction volume under such agreement corresponds to volume of time injection of reserves in bank system. Influence on the currency market is carried out to weaken the currency. The agreement on the return repayment can impose obligations either on the client, or on bank (ФРС).
The co-ordinated contracts about purchase and sale (matched sale-purchase agreements) are opposite to agreements on the return repayment. Carrying out the co-ordinated contract on purchase and sale, bank or ФРС sells currency for the purpose of its immediate delivery to the dealer or foreign central bank, agreeing to redeem this currency back at the same price during caused time in the future (usually within 7 days). Such contract is directed on temporary dump of reserves. The transaction volume under such agreement corresponds to volume of time dump of reserves. Influence on the market is directed thus on strengthening the currency.
Placing of money concerns number of currency transactions in other central banks or международнх funds. Besides, ФРС, since 1962г., has concluded a number of agreements with other central banks about a currency exchange. For example, for rendering assistance to allies on war on clearing of Kuwait of the Iraq occupation in 1990-1991гг. Бундесбанк and Japanese bank placed money in ФРС. Through other central banks the American payments in the World bank and the United Nations Organization т.п are made.
Interventions in the currency market from exchequer and ФРС are directed on orderliness maintenance in the market or regulation of exchange rates. They are not directed on influencing a condition of financial reserves.
Two kinds of currency interventions are known: barefaced (naked intervention) and sterile (sterilised).
Barefaced, or unsterile intervention is connected exclusively with currency trade. Everything that occurs thus, is a purchase or sale by Federal system of dollars for foreign currency. Besides influence on the currency market, change of a financial situation because of inflow or outflow of money thus takes place. Appreciable change of financial streams causes to correct the size of payments under dividends, to change the prices and to make other amendments at all levels of economy. Therefore influence of barefaced currency intervention is long-term.
Sterile intervention is neutral, from the point of view of its influence on monetary receipts. As not many central banks feel desire that their interventions in the currency markets вляли on all parties of economy, sterile intervention is preferable. The same concerns and Federal reserve system. Sterile intervention includes an additional measure within the limits of the initial currency transaction. This measure consists in the sale of the state securities compensating a gain of reserves because of intervention. It is easier for understanding if to imagine that the central bank intends to finance the currency transaction at the expense of sale of certain quantity of the state securities. As sterile intervention influences only a level of demand and offers of separate currency, its effect is short-term or intermediate term.
Подписаться на:
Сообщения (Atom)