Summary

As we can conclude;

• A currency's price in the foreign-exchange market is determined by the interaction of the demand for and supply of the currency.

• Underlying the demand is the desire of foreigners to buy goods, services, and assets of the issuing country.

• Underlying the supply is the desire of the residents to purchase goods, services, and assets owned by foreigners.

• Major international banks in financial centers play a critical role in functioning of the foreign-exchange market.

• In serving their client's needs, the banks are also an important component of the retail market.

• An important features of the foreign-exchange market is its time dimension.

• International businesses may buy currency in the spot market for immediate delivery or in the forward market for future delivery.

• The forward market, currency features, and currency options enable firms to protect themselves from unfavorable future exchange rate movement.

• Arbitrage activities affects the demand for and supply of foreign exchange.

• Purchasing Power Parity (PPP) states that the prices of tradable goods will tent to equalize among countries.

• Two-point arbitrage implies, that the exchange rate between two countries will be the same in all geographic markets.

• Three-point arbitrage link individual foreign-exchange market together. 

• Covered-Interest arbitrage causes geographic differences in interest rates to equal differences between spot and forward exchange rates.

• The international capital market is growing in sophistication as a result of technological advances in telecommunications and computers.

• The Euro currency markets allows banks of any country to conduct lending operations in whatever currencies their clients require. 

• MNCs now commonly raise capital, both debt and equity, on global basis, wherever its cost is lowest.