ABSTRACT
THE MARKET for foreign exchange facilitates the exchange of different national monies across national borders. The exchange rate is a key price, particularly for very open economies and for firms and individuals involved in international business. Since early 1973 the world has operated under a hybrid exchange-rate system: the major currencies are floating and have no central par values; some currencies are fixed in terms of a specially designed basket of currencies or the special drawing right (SDR); and some have fixed rates in terms of a major currency.
