What Is Foreign Exchange Market or FOREX?
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Foreign Exchange Market
Foreign Exchange Market also known as FOREX, is the market for the various currencies in the world. It is a market which, at its core, is rooted in global trade.
Goods and Services are exchanged 24 hours a day all over the world. Those transactions done across national borders require payments in non-domestic currencies.
For example: A US company purchases widget from a Indian Company. To do transaction, one of the two things is going to happen. The US firm may, depending on contract terms, make payment in Indian rupees. That would require a conversion of Dollars into Rupees to make payment.
Alternatively, the payment could be made in Dollars, in which case the Indian company would then exchange the Dollars for Rupees on their end.
Either way, there is going to be some transaction which takes Dollar and swaps them for Rupees.
That is where the Foreign Exchange Market or FOREX comes in. Transaction like the above one place all the time.
The market maintains a rate of exchange between the US Dollar and the Indian Rupee (and many other currencies in the world like Euro, Pound, Yen etc.) to facilitate that activity.
Consider the amount of global trade which takes place and you can see why the forex market is the biggest in the world.
Trillions of dollars worth of Foreign Exchange Market or forex transactions take place each day.
To know the current foreign exchange rate of different currency pairs, click on the below links:
- USDINR (US Dollar – Indian Rupee)
- EURUSD (Euro-US Dollar)
- GBPINR (Great Britain Pound – Indian Rupee)
- GBPUSD (Great Britain Pound-US Dollar)
- USDEUR (US Dollar – Euro)
- USDGBP (US Dollar – Great Britain Pound)
- JPYINR (Japanese Yen – Indian Rupee)
- USDJPY (US Dollar – Japanese Yen)
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Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.
