Economics

Definition: The Purchasing Power Parity or PPP theory posit that the relative value of different currencies equates the real purchasing power of each currency in its own country. In other words, under inconvertible paper currency system, the exchange rate between two countries can be determined on the basis of their purchasing power in their own respective countries. For … [Read more...] about Purchasing Power Parity

Definition: “Speculation” in Foreign Exchange  is an act of buying and selling the foreign currency under the conditions of uncertainty with a view to earning huge gains. Often, the speculators buy the currency when it is weak and sells when it is strong. Also, if the spot rate of the currency is expected to increase in the future, then the speculator buys forward and sell … [Read more...] about “Speculation” in Foreign Exchange Market

Definition: Arbitrage is the process of a simultaneous sale and purchase of currencies in two or more foreign exchange markets with an objective to make profits by capitalizing on the exchange-rate differentials in various markets. The arbitrage opportunities exist due to the inefficiencies of the market. While dealing in the arbitrage trade, an individual can make profits … [Read more...] about “Arbitrage” in Foreign Exchange Market

Definition: The Foreign Exchange Transactions refers to the sale and purchase of foreign currencies. Simply, the foreign exchange transaction is an agreement of exchange of currencies of one country for another at an agreed exchange rate on a definite date. Types of Foreign Exchange Transactions Spot Transaction: The spot transaction is when the buyer and seller of … [Read more...] about Types of Foreign Exchange Transactions

Definition: The market in which the foreign currencies are bought and sold is called a Foreign Exchange Market. Here the buyers and sellers are involved in the sale and purchase of currencies of different countries. Types of Foreign Exchange Market Broadly, the foreign exchange market is classified into two categories on the basis of the nature of transactions. These … [Read more...] about Types of Foreign Exchange Market

Definition: Foreign Exchange Market is the market where the buyers and sellers are involved in the buying and selling of foreign currencies. Simply, the market in which the currencies of different countries are bought and sold is called as a foreign exchange market. The foreign exchange market is commonly known as FOREX, a worldwide network, that enables the exchanges around … [Read more...] about Functions of Foreign Exchange Market

Definition: The Foreign Exchange Market is a market where the buyers and sellers are involved in the sale and purchase of foreign currencies. In other words, a market where the currencies of different countries are bought and sold is called a foreign exchange market. The structure of the foreign exchange market constitutes central banks, commercial banks, brokers, exporters … [Read more...] about Foreign Exchange Market

Definition: The Econometric  Methods make use of statistical tools and economic theories in combination to estimate the economic variables and to forecast the intended variables. The econometric model can either be a single-equation regression model or may consist a system of simultaneous equations. In most commodities, the single-equation regression model serves the … [Read more...] about Econometric Methods

Definition: The Barometric Method of Forecasting was developed to forecast the trend in the overall economic activities. This method can nevertheless be used in forecasting the demand prospects, not necessarily the actual quantity expected to be demanded. Often, the barometric method of forecasting is used by the meteorologists in weather forecasting. The weather conditions … [Read more...] about Barometric Method of Forecasting

Definition: The Trend Projection Method is the most classical method of business forecasting, which is concerned with the movement of variables through time. This method requires a long time-series data. The trend projection method is based on the assumption that the factors liable for the past trends in the variables to be projected shall continue to play their role in the … [Read more...] about Trend Projection Method