Foreign Exchange Dealers in Hyderabad
Increasing global need has led to a massive increase in the number of foreign exchange transactions in recent decades. The global foreign exchange market is the largest financial market in the world, with average daily volumes in the trillions of dollars.
Foreign exchange transactions can be done for spot or forward delivery. There is no centralized market for Forex transactions, which are executed over the counter and around the clock.
Spot Market
Spot for most currencies is two business days. The major exception is the U.S. dollar versus the Canada dollar, which settles on the next business day. Other pairs settle in two business days. During periods with multiple holidays, such as Easter or Christmas, spot transactions can take as long as six days to settle.
The price starts on the trade date, but money is exchanged on the value date. The American dollar is the most actively traded. The most common pairs are the dollar versus the euro, Japanese yen, British pound, and Swiss franc. Trading pairs that do not include the dollar are referred to as “crosses.”
Forward Market
A forward trade is any trade that settles further in the future than spot. The forward price is a combination of the spot rate plus or minus forward points that represent the interest rate differential between the two currencies. Most forward contracts have a maturity of less than a year, but longer terms are possible.
The price is set on the transaction date, but money is exchanged on the maturity date. A forward contract is tailor-made to the requirements of the counter parties. They can be for any amount and settle on any date that is not a weekend or a holiday in one of the countries.
Futures Market
A futures transaction is similar to a forward in that it settles later than a spot deal, but it is a standard size and settlement date and is traded on a commodity market. The exchange acts as the counterpart.