foreign exchange

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Currency-literally foreign money-used in settlement of international trade between countries. Trading in foreign exchange is the means by which values are established for commodities and manufactured goods imported or exported between countries. Creditors and borrowers settle the resulting international trade obligations, such as bank drafts, bills of exchange, bankers' acceptances, and letters of credit, by exchanging different currencies at agreed upon rates.

The result of all this international trade is that financial institutions accumulate surpluses of different currencies from loan repayments by foreign borrowers, and also from import-export trade financing on behalf of bank customers.

The interbank foreign exchange market is an over-the-counter market, a network of commercial banks, central banks, brokers, and customers who communicate with each other by telex and telephone throughout the world's major financial centers. Foreign exchange traders also make markets or speculate in different currencies, usually anticipating future appreciation of stronger currencies against weaker ones, through the foreign exchange Forward Market and the Currency Futures market.

See also Forward Exchange Contract; Forward Forward.

The foreign capital earned by a country's exports. Since the currency of many less developed countries is not accepted by international markets, it often becomes necessary to earn foreign exchange in order to buy imports.

The ways in which debts between two nations that use different currencies are paid. Foreign exchange rates can have an important effect on a nation's economy, because the value of its currency in other countries affects the cost of both imported and exported goods and services. (See balance of payments.)

The market in which currencies are traded. The forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world.

Investopedia Says:
There is no central marketplace for currency exchange; trade is conducted over the counter. The forex market is open 24 hours a day, five days a week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.

The forex is the largest market in the world in terms of the total cash value traded, and any person, firm or country may participate in this market.

Related Links:
In this online tutorial, beginners and experts alike can learn the ins and outs of the retail forex market. Forex Tutorial: The Forex Market
Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers. A Primer On The Forex Market
Before entering this market, you should define what you need from your broker and from your strategy. Getting Started In Forex
We go over the ground rules and available resources needed for this undertaking. Forex: Wading Into The Currency Market

• Cinematography Tools and Techniques - FX: Slang. special effects

Look up foreign exchange in Wiktionary, the free dictionary.

Foreign exchange may refer to:

Finance

• Foreign exchange markets, where money in one currency is exchanged for another
• Exchange rate, the price for which one currency is exchanged for another
• Foreign exchange reserves, holdings of other countries' currencies
• Foreign exchange controls, controls imposed by a government on the purchase/sale of foreign currencies
• Retail foreign exchange platform, speculative trading of foreign exchange by individuals using electronic trading platforms
• Foreign exchange risk, arises from the change in price of one currency against another
• International trade, the exchange of goods and services across national boundaries
• Foreign exchange company, a broker that offers currency exchange and international payments
• Bureau de change, a business whose customers exchange one currency for another
• Currency pair, the quotation of the relative value of a currency unit against the unit of another currency in the foreign exchange market
• Digital currency exchanger, market makers which exchange fiat currency for electronic money

Media

• Foreign Exchange (1970 film), a British television film
• Foreign Exchange (2008 film), a 2008 film starring Jennifer Coolidge
• Foreign Exchange (CNBC World), a television news series on CNBC World
• Foreign Exchange (TV series), television show made by Southern Star Entertainment
• Foreign Exchange (US TV series), a weekly public television show in the US, previously hosted by Fareed Zakaria
• The Foreign Exchange, a hip-hop duo

Other uses

• Foreign exchange service (telecommunications), connection of a phone to a non-local office
• Foreign student exchange, a school program in which students study in another country for a time
• FC Forex Braşov, a Romanian professional football club from Braşov

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