The foreign exchange market is the largest, fastest-growing financial market in the world. Yet conventional macroeconomic approaches do not explain why people trade foreign exchange. At the same time, they fail to explain the short-run determinants of the exchange rate. These essays use a microstructure approach to analyze the workings of the foreign exchange market, with special emphasis on institutional aspects and the actual behaviour of market participants. They examine the volume of transactions, heterogeneity of traders, the time of day and location of trading, the bid-ask spread, and the high level of exchange rate volatility that has puzzled many observers. They also consider the structure of the market, including such issues as nontransparency, asymmetric information, liquidity trading, the use of automated brokers, the relationship between spot and derivative markets, and the importance of systemic risk in the market.
- ISBN10 0226260003
- ISBN13 9780226260006
- Publish Date 15 June 1996
- Publish Status Out of Stock
- Out of Print 1 May 2015
- Publish Country US
- Imprint University of Chicago Press
- Edition 2nd ed.
- Format Hardcover
- Pages 356
- Language English