This text discusses the settlement systems used in foreign exchange markets.
It describes how developed markets use electronic systems such as SWIFT and CHIPS, while India uses a system that reports transactions to the RBI.
The text also discusses the concept of real exchange rates, which adjust for inflation.
Questions
- What are the settlement systems used in foreign exchange markets?
- How are transactions settled in developed markets?
- How are transactions settled in India?
- What is real exchange rate?
Answers
- The settlement systems used in foreign exchange markets include SWIFT, CHIPS, and the RBI system.
- Developed markets use electronic systems such as SWIFT and CHIPS to settle transactions.
- India uses a system that reports transactions to the RBI to settle transactions.
- Real exchange rate is a measure of the relative purchasing power of two currencies. It is calculated by adjusting the nominal exchange rate for inflation.