foreign exchange market

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Foreign exchange market

Largely banks that serve firms and consumers who may wish to buy or sell various currencies.

Foreign Exchange Market

A market for the trading of currencies. For example, one may buy dollars or sell pounds on a forex market. Foreign exchange is one the largest and most liquid markets in the world. Trading occurs over-the-counter, and most of the major players are governments, banks, and speculators. Forex markets are often used in hedging strategies.

foreign exchange market

a MARKET engaged in the buying and selling of FOREIGN CURRENCIES. Such a market is required because each country involved in INTERNATIONAL TRADE and investment has its own domestic currency and this needs to be exchanged for other currencies in order to finance trade and capital transactions. This function is undertaken by a network of private foreign exchange dealers and a country's monetary authorities acting through its central banks.

The foreign exchange market by its very nature is multinational in scope. The leading centres for foreign exchange dealings are London, New York and Tokyo.

Foreign currencies can be transacted on a ‘spot'basis for immediate delivery (see SPOT MARKET), or can be bought and sold for future delivery (see FORWARD MARKET). Some two-thirds of London's foreign exchange dealings in 2000 were spot transactions.

The foreign exchange market may be left unregulated by governments, with EXCHANGE RATES between currencies being determined by the free interplay of the forces of demand and supply (see FLOATING EXCHANGE RATE SYSTEM), or they may be subjected to support buying and selling by countries' central banks in order to fix them at particular rates (see FIXED EXCHANGE RATE SYSTEM).

foreign exchange market

a MARKET engaged in the buying and selling of FOREIGN CURRENCIES. Such a market is required because each country involved in INTERNATIONAL TRADE and FOREIGN INVESTMENT has its own domestic currency, and this needs to be exchanged for other currencies in order to finance trade and capital transactions. This function is undertaken by a network of private foreign exchange dealers and a country's monetary authorities acting through its central banks.

The foreign exchange market, by its very nature, is multinational in scope. The leading centres for foreign exchange dealings are London, New York and Tokyo.

Foreign currencies can be transacted on a ‘spot’ basis for immediate delivery (see SPOT MARKET) or can be bought and sold for future delivery (see FUTURES MARKET). Some two-thirds of London's foreign exchange dealings in 2004 were spot transactions.

The foreign exchange market may be left unregulated by governments, with EXCHANGE RATES between currencies being determined by the free interplay of the forces of demand and supply (see FLOATING EXCHANGE RATE SYSTEM), or they may be subjected to support-buying and selling by countries’ CENTRAL BANKS in order to fix them at particular rates. See FIXED EXCHANGE RATE SYSTEM, TOBIN TAX.

References in periodicals archive ?
The yen had appreciated in recent sessions after Fujii's repeated comments taken to indicate a reluctance to intervene in the currency market to stem the yen's strength.
A senior dealer at a Japanese bank said, ''The movement of the currency market is linked to stock markets.
But the dollar later recovered to the 95 yen level in line with an upturn on Wall Street, currency market analysts said.
Those statements are based on current expectations and involve a number of risks and uncertainties, including those relating the pace of cross-border investment activity, economic and political uncertainties, the extent of volatility in currency markets, the pace at which State Street clients use services, competitors' activities, and the dynamics of the markets State Street serves.
The lack of currency market interventions by Japan indicates the difficulty of countering the yen's ''solo ascent'' without internationally coordinated action, analysts say.
The lack of currency market interventions by Japan this year indicates the difficulty of countering the yen's surge without internationally coordinated action, analysts said.
Asked whether he is thinking about intervening in the currency market later in the day, Finance Minister Shoichi Nakagawa said, ''Of course I have the means to do so.
Earlier in the day, a senior Finance Ministry official suggested that Tokyo may consider stepping into the currency market should the yen strengthen further.
and the bailout of AIG, the currency market has experienced a swing recently, with the dollar-yen exchange rate moving by a margin of about 3 yen from Tuesday to Wednesday.
Nukaga also said he will make no comments on the possibility of Japanese authorities intervening in the currency market.
Key Japanese ministers said Tuesday the government will take no immediate action in the face of global stock downturns and the yen's appreciation in the currency market, with Prime Minister Yasuo Fukuda reiterating that Japan's economy is fundamentally firm.
Kaiser, the president of Zap Futures, said "Zap Futures is extending its products and services into the spot currency market and awarded this contract to Tempest due to the breadth and depth of its spot currency trading team.