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Essay / Research Paper Abstract
This 3 page paper discusses foreign exchange currency markets, as well as the gold standard. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: D0_HVForExc.rtf
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Unformatted sample text from the term paper:
thriving market in currency exchange. This paper discusses the functions of the major foreign currency exchange markets, and the positive and negative aspects of using a gold standard.
Discussion The Foreign Currency Exchange Markets "are also referred to as Forex trading brokerage trades" (Goldberg forex group, 2002). Forex is a relatively new field; it was established
in 1971 "when floating rates began to materialize" (Goldberg forex group, 2002). (Well talk about floating and pegged currency in a moment.) It is an inter-bank or inter-dealer enterprise;
in addition, it is an "over-the-counter" environment, "meaning that transactions are conducted between two parties that agree to trade via the telephone or electronic network" (Goldberg forex group, 2002).
This means that unlike stock markets or special exchanges where futures or options are traded, there is no centralized control of forex trading brokerages (Goldberg forex group, 2002).
When a currency "floats" its currency, that currency is free to move as the market moves, but when one country "pegs" its currency to that of another nation, the first
countrys currency will move with that of the country its pegged to. Poor and developing countries often peg their currencies to the U.S. dollar or to the Euro to
help "stabilize the value of their money" (Schnarr, 2004). "By pegging it to a more stable currency ... a country can stop their currency from fluctuating or depreciating" (Schnarr,
2004). The downside, of course, is that "the countrys economic stability is now in the hands of another country" (Schnarr, 2004). The forex market is enormous, with trillions of
units of currency changing hands every day. There are many reasons for exchanging currency and the one most familiar to individuals is changing money for foreign travel. Businesses
...