19Jun/18

The foreign exchange market (FX, Forex) and how transactions are conducted.

The foreign exchange market (FX, Forex) and how transactions are conducted.

Forex is a word derived from the compound word foreign exchange and it is the largest market in the world. Currencies worth billions of dollars are traded every day in the foreign exchange market that operates 24 hours a day across significant markets in different time zones across the globe. The primary financial markets dealing in forex are located in New York, Zurich, London, Frankfurt, Sydney, Singapore, Hong Kong and Tokyo. InvestMIB The foreign exchange market is an international market that has no central marketplace and is active throughout the day with the quotes of prices shifting every day. Most companies contact international businesses every day and to do so, Forex plays a crucial role in the transaction. If a company intends to purchase meat products from the United States, it would have to pay for the meat in US Dollars. Another example of where foreign exchange occurs is when one decides to take a vacation on the tropical beaches of Mombasa, and they would have to pay for their souvenir courier shells using the local currency and in this case, the Kenyan shilling. There is a high demand for foreign currencies to be exchanged and this is the reason why the foreign exchange market is the largest and most liquid market that exists. The transaction of the Forex are conducted over-the-counter (OTC) by electronically and traders around the world are connected by computers. As mentioned, the Forex market … Read More