FX, or Foreign Currency Exchange, most literally refers to the process of buying or selling one currency for another. It has evolved to encompass the entire market, ecosystem, and global process where currencies are traded.
What Is FX? FX, or foreign exchange, refers to the global marketplace where currencies are traded. It’s a vast and decentralized system involving both physical and electronic exchanges between institutions, businesses, and individuals.
Types of FX Transactions: Currencies are traded in spot markets, where transactions happen immediately, and in forward markets, where future transactions are set at predetermined rates. These markets offer flexibility for hedging, speculating, and facilitating international trade.
Who Participates in FX? Central banks, corporations, and individual traders engage in FX to hedge risk, profit from price movements, or complete cross-border transactions.
What Drives the FX Market? Operating 24/7, the FX market is influenced by geopolitical events, economic reports, and changes in interest rates. Banks, brokers, and online platforms support the infrastructure, all under strict regulatory oversight for transparency and security.
