STUDY ON FOREX MARKET: CASE STUDY

ON VENEZUELA CURRENCY CRISIS

Submitted by
PIYUSHA GHANSHYAM PALANDE
ROLL NO. 35
BATCH: 2018-2020

Under the guidance of

PROF. ALKA DHINGRA
 OBJECTIVE OF THE STUDY
• To understand the various concepts and
technicalities in foreign exchange.
• To understand the various functions and risk
involved in FOREX market.
• To analyze the hedging tools used in foreign
exchange and factors affecting the movement of
exchange rate.
 SCOPE OF THE STUDY
• The FOREX market is open 24 hour a day. This gives
the investors freedom to choose which time they
would like to trade.
• It only requires minimum beginning capital to start
FOREX day trading than beginning a trade in stocks.
• FOREX trading has outstanding liquidity
• The FOREX market goes with the sun as it goes
around the world. It jumps from one major bank to
another major financial center, first from the United
States it will go to Australia, to New Zealand and to
the Far East and then it will travel to Europe and
back to the United States again.
 INTRODUCTION TO THE TOPIC
• The market in which international currency trade
takes place i.e. where foreign currencies are bought
and sold simultaneously is called the Foreign
Exchange (FOREX) Market. It is the organizational
framework within which banks, merchants, firms,
investors, individuals and government exchange
foreign currencies for one another.
• For example, in India the currency in circulation is
called the rupee INR and in the United States, the
currency in circulation is called the US Dollar (USD).
• An example of a FOREX trade is to sell the Indian
rupee while simultaneously buying the US Dollar.
The foreign exchange market in India consists of 3
segments or tires
1. Merchant market
2. Inter-bank market
3. International market
Any currency can be traded on the international level
but as per the ruling of RBI, Indian national cannot
trade in foreign currency from India. But RBI policy
does allow investor to trade in INR currency pairs and
the main pairs are
USDINR
EURINR
GBPINR
JPYINR
 EXCHANGE RATE SYSTEM
• The value for which one currency is exchanged for
another or the value of one currency in terms of
another currency is called exchange rate.
• Different countries have adopted different
exchange rate system at different time. The
following are some of the exchange rate system
followed by various countries.
1. The gold standard
2. Bretton woods system
3. Floating rate system
TYPES OF FOREIGN EXCHANGE RATE
• Fixed exchange rate
• Flexible exchange rate
• Forward rate
• Spot rate
• Dual exchange rate
• Cross currency rate
 FACTOR AFFECTING MOVEMENT OF
EXCHANGE RATES
• Differentials in inflation
• Differentials in interest rate
• Current account deficit
• Public debt
• Terms of trade
• Political and psychological factors
• Speculation
 HEDGING TOOLS AND TECHNIQUES
A) External techniques
• Forward Contracts
• Currency Futures
• Currency Options
• Currency Swaps
• Foreign Debt
• Cross Hedging
• Currency Diversification
B) Internal Techniques
•Netting
•Matching
•Leading and Lagging
•Pricing Policy
•Government Exchange Risk Guarantee
 INTORDUCTION OF THE COMPANY
Asset Villa is a full Service Provider focused on clients
and their ‘end to end’ needs Advisory Services.
With a thorough understanding to fulfil financial goals
of our esteemed clientele, we have designed our
offerings in such a way that most of our client's
requirement in the area of Mutual Fund, Debt,
Insurance and Financial Advisory Services are fulfilled
under a single umbrella.
Our emphasis has always been on quality and timely
delivery of services. Our clients will reap the benefits of
expert advice, fact-based guidance and support from
someone who genuinely cares for their growth.
VISION AND MISSION OF THE COMPANY
• VISSION
Our goal is to be the leader in every market we serve,
to the benefit of our customers.
• MISSION
To help our customers achieve financial prosperity
and peace of mind. As our focus has always been in
all clientele level, we devise customized solutions for
different clients suiting their financial goals fulfill. Our
esteemed client’s financial goals fulfill are paramount
to us. The success of our clients is the biggest reward
for us.
 RESEARCH METHODOLOGY
• SOURCE OF DATA - The major source of data for
this project was collected through, RBI Bulletin, ,
Various websites, Newspaper articles, & some
more information was collected from internet
and text sources.
• TYPE OF RESEARCH – Design is descriptive
research
• Sample size -
DATA ANALYSIS AND DATA
INTERPRETATION
 LIMITATIONS OF THE STUDY

• Study is limited to currency trading

• Study is limited to factors deciding currency
fluctuations.
• Study is limited to how FOREX trading is done.
• Study is limited to FOREX brokers.
• Study is limited to currency trading in India.
• Time constraint
• Resource constraint
 CONCLUSION
Although foreign exchange may be confusing, in
today’s global marketplace, there is a critical need
for almost everyone to understand foreign exchange
like never before. As the world shrinks, there is an
ever-increasing likelihood that we will be required to
address the risks associated with the fact that there
are different currencies used all around the world
and that these currencies will have an immediate
impact on our world. Foreign Exchange market
bright many more banks and advisors convert
themselves into good service of a FOREX trade and
deliver much more efficient.