Basic participants of the currency market

Commercial banks

They realize the primary capacity of the currency transactions. In the banks other participants of the market keep accounts and accomplish the essential conversion and deposit-credit operations with them. Bank sort of accumulates (through the operations with the clients) the cumulative needs of market in the currency conversions, as well as in the attraction/distribution of funds and enters the market with them. Besides the granting of client' applications banks can carry out the operations from their own funds self-determinedly.

Eventually the currency market is the market for interbank transactions, and, speaking subsequently about the movements of currency rates and the interest rates, it is necessary to keep in mind interbank currency market. Larger international banks which daily volume of transactions reaches billions of dollars have the greatest influence on the world currency markets. These are such banks as Deutsche Bank, Barclays Bank, Union Bank of Switzerland, Citibank, Chase Manhattan Bank, Standard Chartered Bank and others. Their main difference is the large volumes of the transactions, which can lead to the significant changes in the quotation or in the currency price.

Usually important players are subdivided into bulls and bears. Bulls - are the market participants, who interested in increase of the currency value; bears - are the market participants, who interested in reduction of the currency value. Usually market is in the balance state between the bulls and the bears, and the difference of quotations varies in the sufficiently narrow limits. However, when bulls or bears "overcome", the quotations of currency change rather harshly and significantly.

Firms realizing foreign trade transactions

Companies participated in international trading, present steady demand for foreign currency (importers) and supply for foreign currency (exporters) and also distribute and attract free exchange remains to the short-term accounts. However, such organizations usually do not have direct access to the currency market and conduct conversion and deposit operations through commercial banks.

Companies realizing external investments of assets (Investment Funds, Money Market Funds, International Corporations)

These companies are presented by different international investment funds and implement a policy diversified management of portfolio assets, accommodating funds into the government securities and corporations of the different countries. At the dealer' slang they are named funds; the most known funds holding successful currency speculations are "ean Witter"and "uantum"owned by George Soros. Such type of firms contain also large international corporations realizing foreign productive investments: branches establishment, joint business, etc., such as Xerox, Nestle, General Motors, British Petroleum, etc.

The Central Banks

Their main aim is currency regulations at the outer market - namely, prevention of the sharp rates upturn of the national currencies for the purpose of the economic crisis' exclusion, support of the export-import balance, etc. The central banks have influence on the currency market. Their impact can be direct - in terms of the currency intervention and indirect - through regulation of the money supply and interest rates. They can not be qualified as bulls or bears, because they can play both to the increase and decrease on the basis of specific problems facing them at the given moment. The Central bank can come out to the market singly to influence the national currency or concurrently with other Central banks for carrying out joint exchange policy on the international market or for the joint interventions. US Federal Reserve (FED), Deutsche Bundesbank, Bank of England have the greatest influece on the world currency market.

Exchange markets

In some countries with transition economy exchange markets are acting with the functions of currency exchange for legal bodies and forming market exchange rate. The State usually extensively regulates exchange rate using compactness of the exchange market.

Currency brokerage firms

They bring into contact customer and seller of the currency and realize conversion and loan-depositing operations between them. Brokerage firms charge commission calculated as a percentage of the deal amount.

Private individuals

Individuals conduct the wide range of the non-trading operations in the foreign tourism, salary, pension and fees' transactions, buying and selling of cash. In 1986 with the introduction of margin trading individuals got an opportunity to invest available cash assets at FOREX market for the purpose of profit taking.