The Federal Reserve System of the USA and Central Banks of the Other G-7 Countries

The Federal Reserve System of the USA Like the other central banks, the Federal Reserve of the USA affects the foreign exchange markets in three general areas: • the discount rate; • the money market instruments; • foreign exchange operations.For the foreign exchange operations most significant are repurchase agreements to sell the same security back at the same price at a predetermined date in the future (usually within 15 days), and at a specific rate of interest. This arrangement amounts to a temporary injection of reserves into the banking system. The impact on the foreign exchange market is that the dollar should weaken. The repurchase agreements...

Kinds of Exchange Systems

Trading with Brokers Foreign exchange brokers, unlike equity brokers, do not take positions for themselves; they only service banks. Their roles are:• bringing together buyers and sellers in the market; • optimizing the price they show to their customers; • quickly, accurately, and faithfully executing the traders' orders.The majority of the foreign exchange brokers execute business via phone. The phone lines between brokers and banks are dedicated, or direct, and are usually in-stalled free of charge by the broker. A foreign exchange brokerage firm has direct lines to banks around the world. Most foreign exchange is executed through an open...

What is major currencies?

definition and meaningThe U.S. Dollar The United States dollar is the world's main currency. All currencies are generally quoted in U.S. dollar terms. Under conditions of international economic and political unrest, the U.S. dollar is the main safe-haven currency which was  proven particularly well during the Southeast Asian crisis of 1997-1998. The U.S. dollar became the leading currency toward the end of the Second World War and was at the center of the Bretton Woods Accord, as the  other currencies were virtually pegged against it. The introduction of the euro in 1999 reduced the dollar's importance only marginally. The major currencies...