Foreign Exchange Market

Foreign exchange market trading currencies. This means banks and other institutions that buy and sell currencies.

The purpose of the foreign exchange market, assists in international trade and investment. Foreign Exchange helps companies convert from one currency to another. For example, allow U.S. business for European goods for import and pay for the euro, although the company revenue in U.S. dollars.

In a typical purchase transaction exchange participant of one currency and pay the amount in another currency. The modern foreign exchange market began to take shape in 1970 when the country moved gradually a system of floating exchange rates as compared with the previous one, which remained after the Bretton Woods system of fixed.

The Forex market is unique because

* Trading volume,
* Extreme liquidity in the market,
* In geographical distribution,
* Long trading hours: 24 hours a day except on weekends (from 22:00 Sunday to 22:00 hours on Friday)
* Variety of factors that influence exchange.
* Low rate of profit in other markets of fixed comparison of income (profit, but may be high due to very large trading volumes)
* The use of borrowed funds

As such, it has been on the market closer to the ideal of perfect competition, notwithstanding market manipulation by central bank said. According to the Bank for International Settlements, [2] average daily turnover in global foreign exchange market at $ 3.98 trillion. Trading in the largest financial centers in the world markets, the $ 3.21 trillion this. That's about $ 3.21 trillion in main foreign exchange market turnover was broken down as follows:

* $ 1.005 trillion in spot transactions
* $ 362 billion on direct forward
* $ 1.714 trillion in foreign exchange swaps
* $ 129 one billion estimated gaps in reporting