This study is to highlight the growth trend that has been achieved in the international financial market showing the curve over the past three decades. The paper starts with the basics of the global financial markets and moves to explaining the components viz., the foreign exchange, international capital, and the international stock markets. The development and the growth trend of the market are subdivided and depicted with the aid of graphs and charts for analytical review. Obstacles hindering the smooth growth are also dealt with in the paper.
International Financial Markets collectively represents the total international trade and transaction in the foreign exchange market, international capital or foreign exchange basically refers to an over-the-counter (OTC) market, focusing on an international currency trade. (Nature of foreign exchange, 2007) The whole scenario of international trade comprising of imports and exports and the flow of international capital is carried out through the Foreign exchange market. (Foreign Exchange in Economics, 2007) The international exchange market is the largest global market place in regard to the monetary value traded, also includes international interbank trading, the exchange between central banks, multinational corporations and other international level speculators. The estimated average current global trade rate exceeds US$1.9 trillion/day. (Foreign Exchange Market, 2007)
The foreign exchange market is the place where trading of currencies takes place. The foreign exchange market proclaims to be the largest and most volatile market all over the globe. Under foreign exchange, foreign currency is used for trading and the trade takes place between nations. Price list for the goods or services imported or exported items between countries etc. gets its cash value established from the foreign exchange trade. ‘Bank drafts, bills of exchange, bankers acceptances, and letters of credit’ etc., could be exchanged at previously agreed rates for settlement of debts.