The Foreign Exchange Market

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This is by far the largest market in the world, with an estimated $1.6 trillion average daily turnover. It is distinguished from the commodity or equity markets by having no fixed base. In other words, the foreign exchange market exists at the end of a telephone, the Internet or other means of instant communication; it is not located in a building, nor is it limited by fixed trading hours. The foreign exchange market is truly a 24-hour global trading system. It knows no barriers and trading activity in general moves with the sun from one major financial centre to the next. The foreign exchange market is an over-the-counter market where buyers and sellers conduct business.

The foreign exchange market is a global network of buyers and sellers of currencies.

Foreign exchange or FX or Forex comprises all claims to foreign currency payable abroad, whether consisting of funds held in foreign currency with banks abroad, or bills or cheques payable abroad; i.e. it is the exchange of one currency for another.

A foreign exchange transaction is a contract to exchange one currency for another currency at an agreed rate on an agreed date.

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