What is foreign exchange market in simple words?

What is foreign exchange in simple words?

Foreign exchange, or forex, is the conversion of one country’s currency into another. In a free economy, a country’s currency is valued according to the laws of supply and demand. In other words, a currency’s value can be pegged to another country’s currency, such as the U.S. dollar, or even to a basket of currencies.

What is foreign exchange market meaning?

foreign exchange market (forex, or FX, market), institution for the exchange of one country’s currency with that of another country. … A foreign exchange market is a 24-hour over-the-counter (OTC) and dealers’ market, meaning that transactions are completed between two participants via telecommunications technology.

What is foreign exchange market explain its structure?

Definition: The Foreign Exchange Market is a market where the buyers and sellers are involved in the sale and purchase of foreign currencies. … The structure of the foreign exchange market constitutes central banks, commercial banks, brokers, exporters and importers, immigrants, investors, tourists.

What is the role of foreign exchange market?

Transfer Function: The basic and the most obvious function of the foreign exchange market is to transfer the funds or the foreign currencies from one country to another for settling their payments. The market basically converts one’s currency to another.

What is foreign exchange market and its features?

The features of the foreign exchange market include it’s high liquidity, transparency, dynamism, 24 hour operation, low transaction cost, and a large bias towards towards the US dollar.

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Why is foreign exchange market unique?

The foreign exchange market is unique. Factors that make the foreign exchange market unique are its continuous operation, large trading volume, and geographical dispersion. … The foreign exchange is a floating exchange rate rather than a fixed exchange regime.