The exchange rate is also an indicator of building up or weakening of a currency. Exchange rate for currencies is determined by foreign exchange traders.

If we want to purchase or buy a currency, the exchange rate lets us know how much we would have to pay to purchase that currency. The currency exchange rate basically tells us the worth of our money in foreign currency. One central national bank of every country sets exchange rate of currency on daily basis and this process is known as Foreign Exchange Fixing.

International banks, most famous being Deutsche Bank, Barclays, HSBC, Standard Chartered, Citi etc are involved in fixing the rate of currency exchange in the global market. The more open markets of the world are of Canada, Australia, Western Europe and USA whereas North Korea, Brazil and Cuba are comparatively closed markets, allowing lesser number of economic participants to trade in the market.Īpart from buying and selling of goods, currencies are also exchanged between open markets of different countries. An open market is free of tariffs, subsidies and levies, which ensures the participation of more entities in the market.

Open market gives equal opportunity to all economic players in the buying and selling of currency, goods, assets etc. The lesser the impact of the following on market of any country, the more open is the market of that country. Generally these are the constraints that make trade difficult. The number of regulations, government imposes on these markets.Any sort / number of cultural constraints which might hinder the trade.

The word “open” in open market generally refers to the following characteristics of any market In terms of banking, open market allows the transaction of assets between countries. In easy words open market basically allows free trade between countries. An open market is basically that market of any country to which all economic players have an access to and can do the trade without the tension of extraneous constraints.

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