INTRODUCTION

The foreign exchange market (forex, FX, or currency market) is a world wide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies. The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend high-yielding currencies, and which may lead to loss of competitiveness in some countries. In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market began forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of Its huge trading volume, leading to high liquidity Its geographical dispersion Its continuous operation: 24 hours a day except weekends The variety of factors that affect exchange rates

Objectives of the Study

To study the functioning and structure of foreign market. To study the exchange rate determination. To evaluate critically exchange control methods. To show volatility of foreign currency.

Methodology of Study
For the preparation of any project report the collection of relevant data is very much essential there are basically two board methods for collecting data, which are followed in a new report these methods are 1. 2. Primary data collection. Secondary data collection.

Primary data is collected by meeting the concerned people through consultation of a personnel observation. Secondary data is collected from sites: NSEINDIA, FX MARKET TRACKER and X-RATES.

LIMITATIONS OF THE STUDY

The study was limited to only foreign currency. The data is compared and analyzed on the basis of performance of the forex currency rates over the past months. The required data available on net from 19th Oct 2010 to 29th Dec 2010.
It was very difficult to obtain the date regarding the currency rates yielded by USDINR, GBPINR, EURINR and JPYINR

BIBLOGRAPHY
BOOKS REFERRED:
INTERNATIONAL FINANCE ------MAURICE.LEVI MULTINATIONAL MANAGAMENT ------ALACC.SHAPIRO INTERNATIONAL FINANCE ------G SHAILAJA

WEB SITES:
WWW.X-RATES.COM WWW.MONEYCONTROL.COM WWW.WIKIPEDIA.COM WWW.INDIABULLS.COM WWW.NSEINDIA.COM