Foreign Currency Dealing

Foreign Currency Dealing- Foreign Exchange (forex or FX) is the trading of one currency for another. For example, one can swap the U.S. dollar for the euro. Foreign exchange transactions can take place on the foreign exchange market, also known as the Forex Market. The foreign exchange market is where currencies are traded. Currencies are important to most people around the world, whether they realize it or not because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). 

Forex or FX is one of the biggest and most liquid currency markets in the world. This is because it’s run electronically and continuously over the counter (OTC) or on an inter-bank basis.

Transactions on the foreign exchange market are facilitated by the comparison of pairs. The base currency is that which is to be purchased, while the counter currency is that which is to be sold. The currency pair is represented by the amount of counter currency required in order to purchase one unit of the base currency.

The forex market is the largest, most liquid market in the world, with trillions of dollars changing hands every day.1 There is no centralized location, rather the forex market is an electronic network of banks, brokers, institutions, and individual traders (mostly trading through brokers or banks). Commercial banks dealing in foreign currencies and holding assets and liabilities in foreign-denominated currencies are constantly exposed to Foreign Exchange Risk. These risks come from the activities that are carried out by the bank. The activities include The purchase/sale of foreign currencies to allow customers to participate in international commercial trade transactions. 

It includes the followings:

• Currency Convertibility
• Foreign Exchange Market
• Technology and Trading
• Participants in the Foreign Exchange Market
• Foreign Exchange Rate and Exchange Quotations
• Currency Arbitrage

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