How Foreign Exchange System Works

The Foreign Exchange Market is the financial market in which currencies are bought & sold that is a transaction is entered in to where a given amount of money is exchanged for another amount of money. The necessity for the Foreign Exchange Market (often known as the Foreign exchange Market) developed to facilitate International trade where currencies were necessary to be settled from the country of both the importer & the exporter. It therefore plays an important role in facilitating cross-border trade, financial transactions & investment. You can read about currency conversion rates daily via his link. 

More recently, it allows borrowers to have access to the International capital markets in order to meet their financing needs in the money which is most conducive to their requirements.

Characteristics of the Foreign Exchange Market

The Foreign exchange Market does not exist physically. It is a framework in which participants are connected by computers, rings and telex (SWIFT) and operates in most financial centres globally. Because the Foreign exchange Market is so highly integrated globally, it can operate round the clock - when major market is closed, another major market is open to facilitate trade occurring round the clock moving from major market to another. Most exchanges of money are made through bank deposits that is transferred electronically from account to another.


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