Navigation Systems Inc Essay Example | Topics and Well Written Essays - 500 words

Navigation Systems Inc - Essay Example One can buy a foreign currency for a month from today, or for two months from today. It is clear that the repatriation must be made using a spot rate because it gives a greater amount of conversion with that of a forward exchange rate. The company must be advised to convert its income at spot transaction for a greater yield. Benefits can be derived using a currency option or a currency swaption especially when the exchange rates are high and will yield a greater amount of that currency. Foreign exchange market is where the exchange rate is determined. This market is not a single gathering place where traders shout buy and sell orders at each other. Traders work at their desk dealing with each other by computer and by phone. The daily volume of business dealt with on the foreign exchange markets in 1998 was estimated to be over $2.5 trillion dollars. (Daily volume on New York Stock Exchanges is about $20 billion) Today (2006) it may be about $5 trillion dollars. The daily volume of the foreign exchange market in North America in October 2005 was about $440 billion. The Foreign Exchange market expanded considerably since President Nixon closed the gold window and currencies were left afloat vis--vis other currencies and speculators could profit from their transactions. Until recently, this market was used mostly by banks, who fully appreciated the excellent opportunities to increase their profits.