Filetype Power Point PPTX | Posted on 01 Sep 2022 | 3 years ago
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Definition :
The foreign exchange market
(currency, forex, or FX) trades
currencies. It lets banks and other
institutions easily buy and sell
currencies.
The purpose of the foreign
exchange market is :
To help international trade and
investment.
A foreign exchange market helps
businesses convert one currency
to another.
- For example, it permits a U.S.
business to import European goods
and pay Euros, even though the
business's income is in U.S. dollars.
In a typical foreign exchange
transaction a party purchases a
quantity of one currency by paying a
quantity of another currency. The
modern foreign exchange market
started forming during the 1970s when
countries gradually switched to
floating exchange rates from the
previous exchange rate regime, which
remained fixed.
The foreign exchange market is
unique because of :
- its trading volumes,
- the extreme liquidity of the
market,
- its geographical dispersion,
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