Financial markets/Financial markets : The Foreign Exchange Market

Overview
The Foreign Exchange Market is the buying and selling of foreign currency. In Thailand, transactions in this market are conducted through registered banks that have been authorized by the Bank of Thailand (BOT) to exchange foreign currency for their customers in order to facilitate trade and international investment.
The rate of exchange is the price of the monetary unit of one country calculated in the currency of another country. The exchange rate is determined by market mechanisms through the levels of supply and demand for foreign exchange. Demand follows from the demand for foreign goods and services, investments abroad and foreign aid. Supply follows from exports of goods and services and the influx of foreign currency from various types of transactions, such as, for example, investments and aid from other countries.
The Thai baht was floated on the market in the form of a managed float on July 2, 1997. Since then, exchange rates for the baht have been determined by the forces of supply and demand on money markets, both domestic and abroad, rising and falling along with the fundamentals of the economy.
Currency exchanges in 2008 between Thai financial institutions and their domestic customers and financial institutions abroad totaled approximately 770 billion USD, or 2.1 billion a day. The Thai financial institutions making these transactions included the Bangkok International Banking Facility and other financial institutions authorized to make foreign payments: the Export-Import Bank of Thailand, the Islamic Bank of Thailand, the Government Savings Bank, and the SME Bank.