Developments in Global Financial Market Because of Foreign Exchange

Because of the advances in the financial market since 1970’s there is a huge transformation in the global financial exchange. The development is not only done in the size, but also has been done in the coverage, architecture and the operation. As a result of the structural changes in the economy and the international financial system, the transformation has been done.

These are some of the developments which had been occurred. They are:

  • Fixed exchange rate has been changed to the flexible legal structure. In the flexible legal structure, different nations can choose different exchange rates or they can follow the different exchange rate regimes and practices of their choice.
  • Because of the elimination of the restrictions by the governments in all the nations, there is an increase in the competition among different financial institutions which are in and across different nations.
  • With the institutions and the funds managers across the world, large amounts of money is available, which is used for investing in the new ways and maximizes the return amount.
  • Trade liberalization has been broadened and deepened using the improvements.
  • Real time transmission of the large amounts of market and the execution of the financial transactions results due to the advances in the technology.
  • The developments of new financial instruments, products and improvements in thinking are result from the breakthroughs in the theory and the finance.

The main aim which is behind the developments in the markets is because of the improvements in the freedom and the competition of the market.

The turn over of the exchange in the United States in 1998 was $351 billions a day which is 43% more when compared to 1995 and it is 60 times more when compared to the 1977.

The daily turn over of the market has included only the three traditional instruments like spot, outright forwards and foreign exchange swaps. During the recent years, there is a continuous growth in the trade and the expansion in the global finance and the investment has occurred because of the improvements in the foreign exchange turn over.