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Economics/Forex currency availability


QUESTION: Dear Prof Raza

Is Forex currency always available with Forex Banks service providers as there are so many countries?.


ANSWER: Could you please elaborate your question in order that I may try to give a more befitting answer!


---------- FOLLOW-UP ----------

QUESTION: Dear Prof Raza


There are total 196 countries in the world and total 167 currencies.

Do the Forex financial services providers have a stock of all the currencies for their customers?.

If no, What would be the reasons?.


Hi Prashant,

Forex financial services do not necessarily have a stock of all the currencies for their customers in all the places. Nor do they keep the same proportions in each of the places.Some countries may not entertain exchanges of currencies, e.g., Pakistan for Israeli currency.

The international system of currency exchange is something like the banking system. They do have stocks of all the currencies but each such service in one place does not necessarily keep all the currencies. Normally they keep more in stock of those currencies (such as U.S. dollars and pound sterling) in larger amounts than others. Those currencies which are the least in demand at any place are kept either in negligible amount or not at all, although there is system to draw on resources when there is unexpected demand.

Today's international banking system is such that inter-station communication and digital transactions can take place in seconds. Also, there are banks of different countries across continents and there are transactions between foreign banks and forex financial services providers. So these service providers are not expected to face any problem in meeting inter-currency transaction demand.

There are more subtle intricacies involved. I hope this gives you a rough idea about how the system works.

Best of luck in your endeavors for delving into the important aspect of financial economics.


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Eklimur Raza


It appears some students in this website are confused about elasticity of demand and the slope of the demand curve when they are trying to figure out why rectangular hyperbola comes up in case of unitary demand curve. First, they don't know that RH can be depicted in a positive quadrant of price,quantity plane. Secondly, they make the mistake that the slope of RH is constant at -1. Two points could help them: first, e=1 at each and every point of the RH, because the tangent at any point shows lower segment=upper segment (another geometric definition of e); yet slopes at different points,dQ/dP, are different; second, e is not slope but [(Slope)(P/Q)]in absolute terms. Caveat: only if we measure (log P) along the horizontal axis and (log Q) up the vertical axis, can we then say slope equals elasticity --in which case RH on P,Q plane is transformed into a straight-line demand curve [with slope= -tan 45 deg] on (log Q),(logP) plane, and e= -d(log Q)/d(log P). [By the way, logs are not used in college textbooks --although that is helpful in econometric estimation of elasticity viewed as an exponent of P, when demand equation is transformed into log-linear form.] I have not found the geometrical explanation I have given in any textbook followed in undergraduate and college classes in Canada (including the book followed in a university where I taught for a short time and in the book followed in George Brown College, Toronto, where I teach.


About 11 years' teaching economics and business studies, and also English, history and elementary French.Practical experience in a development bank, working with international donor agencies like the World Bank and the ADB. Experience in free-lance journalism, including Canada's "National Post."

I teach micro- and macroeconomics at George Brown College (continuing education), Toronto, ON, Canada.

Many articles and editorials, on different subjects, in English newspapers. Recently an applied Major Research Paper, based on a synthesis of the Solow growth model and the Lewis two-sector model, has be accepted by Ryerson University, Toronto. Professors Thomas Barbiero and Eric Cam, Ryerson University, accepted the paper.

Master degree in Interantional Economics and Finance and diploma with honours in Business Administration from Canada.

Awards and Honors
Received First Prize in an inter-university Literary Contest.

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