Foreign Exchange

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FOREIGN EXCHANGE MARKET

Foreign Exchange – Any currency, other than the local currency, which is used in settling international transactions.

Foreign Exchange Rate - the price for which one currency is exchanged for another

Foreign Exchange Market - are the institutions or systems involved with changing one currency into another.

* Exchange rates are determined on the basis of supply and demand in the foreign exchange market

* Foreign currency dealers provide two quotes:
Bid Price: Price at which the dealer is willing to buy foreign currency from you.
Ask Price: Price at which the dealer is willing to sell foreign currency to you. It is always the case that the Ask Price > Bid Price. The difference is the Bid-Ask spread. The less traded and more volatile a currency, the greater is the spread.

* The role of the BSP in the foreign exchange market is principally to ensure orderly conditions in the market.

Philippine Dealing System (PDS)
Bankers Association of the Philippines (BAP) member-banks and between these banks and the BSP.

Philippine Dealing and Exchange Corp. (PDEx)
An electronic platform that most of the BAP-member banks which participate in the peso-dollar trading. •Official service provider for the USD/PHP spot trading

Some of the BAP Members:
Allied Banking Corporation
Banco de Oro-EPCI Inc.
Bank of Commerce
Bank of the Philippine Islands (BPI)
Development Bank of the Philippines (DBP)
East West Banking Corporation
Philippine National Bank (PNB)
Rizal Commercial Banking Corporation (RCBC)
Security Bank Corporation
Union Bank of the Philippines
United Coconut Planters Bank (UCPB)

*Trading through the PDEx allows nearly instantaneous transmission of price information and trade confirmations

*Commercial banks in the Philippines are allowed to engage in spot, outright forward, and swap transactions in Philippine pesos/US dollar and other third currency transactions....
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