Q. Consider the following statements:
Foreign Exchange markets are dynamic and round the clock markets.
Some Foreign Exchange markets operate within a country’s time zone.
Foreign Exchange markets are used only for trade
Which among the above is/ are correct statements?
Answer: Only 1
Notes:
- Foreign Exchange markets are dynamic and round the clock markets: This statement is correct. Foreign exchange markets operate 24 hours a day, 5 days a week, to facilitate trading across different time zones. Currencies are traded continuously which makes the markets highly dynamic.
- Some Foreign Exchange markets operate within a country's time zone: This statement is incorrect. Major foreign exchange markets like London, New York, Tokyo, Frankfurt, Singapore etc operate across time zones to enable global trading. No major FX market operates only within a single time zone.
- Foreign Exchange markets are used only for trade: This statement is incorrect. FX markets facilitate not just international trade but also global investment flows and speculation.
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