Currency Markets

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                                  International trade is the exchange of goods and services as well as resources between countries. International trade involves transactions between residents of different countries. In the case of international trade, we require to exchange of currency between the importers, exporters, and banks, which is called a FOREX MARKET. Forex market required for the importers to convert a rupee into the dollar and for exporters from a dollar to rupee.

Important theories of International Trade

                                           Many goods and services are imported by us because they are simply not produced in our country and various reasons and exported by us to other countries in which we are surplus. The following are some of the theories of international trade as follows: -

01.The mercantilists view of international Trade

02. The Theory of absolute advantage

03.The Theory of comparative advantage

04. The Heckscher - Ohlin Theory of Trade.

05. New Trade Theory. 

                                   Forex market is the market for the exchange of currencies between importers, exporters, and banks. Currency markets are required for the conversion of Rupee to Dollar for importers and Dollar to Rupee for exporters. For example, India is importing oil from gulf counties, which in return India needs to pay the bill in terms of USD, where India needs to convert Rupee into Dollars. In case India is exporting IT services to foreign countries, in turn, they receive the consideration in USD, where they need to convert USD into Rupee.

                                      In every currency exchange, there are Home Currency and Foreign currency. Foreign Exchange refers to money denominated in a currency other than the domestic currency. Home currency is the currency of the country in which the company operates its activities. For instance, Infosys has the home currency has Indian Rupee and USD as a Foreign currency, Foreign currency is the currency other than home currency.

                                         Direct quote refers to the amount of home currency per one unit of foreign currency. Fro example, Rs.75 per 01 USD

Location: India

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