Topic
Foreign exchange market
About: Foreign exchange market is a research topic. Over the lifetime, 6661 publications have been published within this topic receiving 153384 citations. The topic is also known as: forex & FX.
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TL;DR: In this paper, the authors highlight fundamental yet unanswered questions on the nature of private information, the impact on market liquidity, and the changing process of price discovery, and outline potential microstructure explanations for long-standing exchange rate puzzles.
84 citations
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01 Jan 1990
TL;DR: The difficulties encountered in analysing the likely supply/demand balance for commodities and currencies cannot be over-emphasised and it is undoubtedly for this reason, as much as any, that techical analysis has long been popular in the commodity markets and has now become an essential tool in the FOREX markets too.
Abstract: The difficulties encountered — in the near term in particular — in analysing the likely supply/demand balance for commodities and currencies cannot be over-emphasised and it is undoubtedly for this reason, as much as any, that techical analysis has long been popular in the commodity markets and has now become an essential tool in the FOREX markets too. A recent Bank of England survey found that by far the vast majority of chief dealers in banks use at least some chartist input. They also found, perhaps to their surprise, that technical analysis was being used as a complementary tool to fundamental analysis; when considered logically this should without doubt be the case since each form of analysis effectively represents one side of the coin. Fundamental analysis is undertaken in an attempt to establish ‘value’, whilst technical analysis rests on the examination of price alone; anyone who has been in the markets for any length of time will recognise that the two are frequently not the same.
84 citations
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TL;DR: The authors assesses empirically the relevance of these factors, as well as that of alternative explanations for DL and find that ongoing central bank intervention in the foreign exchange market, relative market power of borrowers, and financial penetration are at least as important as the usual suspects in explaining DL.
Abstract: Dollarization of liabilities (DL) has emerged as a key factor in explaining the vulnerability of emerging markets to financial and currency crises. The "usual suspects" of causing DL include fatalistic determinants such as a long history of unsound macroeconomic policies, financial development and institutional factors, aided by moral hazard opportunities arising from the existence of government guarantees. This paper assesses empirically the relevance of these factors, as well as that of alternative explanations for DL. Based on a sample of Latin American countries, we find that ongoing central bank intervention in the foreign exchange market, relative market power of borrowers, and financial penetration are at least as important as the usual suspects in explaining DL.
84 citations
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TL;DR: The authors found that changes in the RMB/USD rates in both markets have statistically and economically significant impact on changes in Asian currency rates against the US dollar, after controlling for other major currency moves and the transmission of China's monetary policy to the region.
84 citations
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TL;DR: This article studied the information in order flows in the world's largest over-the-counter market, the foreign exchange market, and found that order flows are highly informative about future exchange rates and provide significant economic value.
Abstract: We study the information in order flows in the world's largest over-the-counter market, the foreign exchange (FX) market. The analysis draws on a data set covering a broad cross-section of currencies and different customer segments of FX end-users. The results suggest that order flows are highly informative about future exchange rates and provide significant economic value. We also find that different customer groups can share risk with each other effectively through the intermediation of a large dealer, and differ markedly in their predictive ability, trading styles, and risk exposure.
84 citations