ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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are forbidden.
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dangerous.
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are speculative.
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None of the above
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Detailed explanation-1: -Today, the real economy in foreign exchange transactions is down to 2.5% and 97.5% is now speculative.
Detailed explanation-2: -Companies and traders use forex for two main reasons: speculation and hedging. The former is used by traders to make money off the rise and fall of currency prices, while the latter is used to lock in prices for manufacturing and sales in overseas markets.
Detailed explanation-3: -A speculative transaction is a transaction of purchase or sale of a commodity including stocks and shares settled otherwise than by actual delivery or transfer of the commodity or scrip (Section 43(5) of the Income-tax Act)
Detailed explanation-4: -Currency derivative transactions are not speculative transaction-Section 43(5)