What is a foreign exchange (forex) market?

The foreign exchange (forex) market is the largest financial market in the world and is made up of banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers, and investors.

What is currency exchange?

Currency exchange of this kind is one of the demand factors for a particular currency. Foreign exchange, also known as forex, is the conversion of one country's currency into another. The value of any particular currency is determined by market forces related to trade, investment, tourism, and geopolitical risk.

What is forex & how does it work?

Forex exists so that large amounts of one currency can be exchanged for the equivalent value in another currency at the current market rate. Some of these trades occur because financial institutions, companies, or individuals have a business need to exchange one currency for another.

Why is foreign exchange important?

There is always an exchange of goods and services across borders, which helps facilitate international trade between countries. Transactions in the foreign exchange market provide a mechanism for transferring purchasing power from one currency to another.