Inside the Foreign Exchange Universe

About the Book

The foreign exchange (FX) market is the largest financial market and has a daily turnover close to five trillion US dollars. The evolution of the foreign exchange market since the abrogation of the Bretton Woods agreement in 1971 has been remarkable. The FX market, which was once accessible only to large banks and institutions, is now within reach of average people. This significant change stems from market liberalisation, globalisation, and advancements in technology. Most people carry out some sort of foreign exchange transaction very frequently – this transaction occurs directly or indirectly. Plus, the fluctuations in exchange rates affect the financial lives of people on a regular basis. Yet the subject of foreign exchange is widely misunderstood because of its intricacies. It is essential to establish a basic understanding of FX because it has an important influence on our earnings, expenditures, savings, and investments. Though a lot has been written on the subject, much of the literature lacks precision. This book fills that gap by providing readers with a condensed and precise explanation of foreign exchange and its market dynamics. Tholoor M Thomas draws on his forty-one years of experience in the foreign exchange market to introduce the forex basics, factors affecting exchange rates, exchange rate arithmetic, exchange rate regimes, options and futures used to hedge currency risks, evolution of the market through history, major market participants, numerous world currencies, and the key jargons used in the industry. This book provides a wealth of information for students of finance, those looking to begin a career in foreign exchange, investment analysts, portfolio managers, and anyone interested in attaining a deeper knowledge of the foreign exchange universe.

About the Author

Tholoor M Thomas is an experienced investment professional with over forty years of global investment management experience in all major asset classes, including foreign exchange. Thomas commenced his career in the foreign exchange department of India’s premier bank, State Bank of India, in 1971. It was during the same year that the modern floating exchange rate regime came into effect. Thomas had hands-on experience with all facets of foreign exchange during his career with the bank. Later, he moved to the Middle East and served two large institutions. Thomas was employed for over thirty years in the investments and asset management department of a leading financial institution, Arab Insurance Group (Arig), in Bahrain. . As director of investments and asset management, Thomas played a decisive role in all aspects of multi-currency investments for a large, global portfolio. This activity included the management of sizable foreign exchange exposure. He is a chartered financial analyst (CFA). He is a member of the CFA Institute in the United states and the CFA Society Bahrain. Thomas was the Annual Financial Forecast winner (CFA Society Bahrain) in 2010 and the winner of currencies forecast in the Citibank Treasury competition held in 1987. Thomas is currently the managing director of ValueTree Consultancy W.L.L., a business consultancy firm in Bahrain.