25. Exchange Market

Página 25

The Foreign Exchange Market is an environment where foreign currency purchase and sale operations take place. It is an extremely relevant market in the global economic scenario, as its operations directly influence the economy of countries. For public tenders, it is essential to understand the functioning and main characteristics of the Foreign Exchange Market.

First of all, it is important to understand that the Foreign Exchange Market is divided into two segments: the primary market and the secondary market. In the primary market, foreign currency purchase and sale operations take place between banks and their customers. In the secondary market, foreign currency purchase and sale operations take place between the banks themselves.

Exchange operations can be classified into three types: commercial, financial and tourism. Commercial operations are related to foreign trade, such as import and export of goods and services. Financial operations are related to investments and loans in foreign currency. Tourism operations are those carried out by individuals traveling abroad.

The exchange rate is the price of a foreign currency in terms of the domestic currency. It is determined by the market, through the supply and demand of foreign currency. The exchange rate can be fixed, when determined by the government, or floating, when determined by the market. In Brazil, we have adopted the floating exchange rate regime since 1999.

There are also foreign exchange swap operations, which are exchange operations for payment flows in different currencies. These operations are used to protect against exchange variations. The Central Bank of Brazil uses the exchange rate swap as a monetary policy instrument to control inflation and the exchange rate.

The Foreign Exchange Market is regulated and supervised by the Central Bank of Brazil. The institutions authorized to operate in the Foreign Exchange Market are banks, exchange brokers, securities dealers and credit, financing and investment companies.

Exchange operations are registered in the Central Bank Information System (Sisbacen). Sisbacen is a computerized system that allows the Central Bank to monitor all exchange operations carried out in the country. It is through Sisbacen that the Central Bank controls the flow of foreign currency in and out of the country.

Exchange transactions are subject to the Tax on Financial Operations (IOF). IOF is a federal tax levied on credit, exchange and insurance operations, or related to bonds or securities. The IOF rate varies according to the type of operation and the term of the operation.

In summary, the Foreign Exchange Market is a complex and dynamic market, which plays a key role in the world economy. For public tenders, it is essential to understand the functioning and main characteristics of the Foreign Exchange Market, as well as the regulation and supervision of this market by the Central Bank of Brazil.

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2626. Derivatives Market