What is Foreign Exchange?
Foreign exchange (forex) refers to global currencies and the market where they are traded, with exchange rates determining their relative value.
Foreign exchange, or forex, encompasses all foreign currencies and the decentralized global marketplace where they are traded. Major currencies include the US Dollar (USD), Euro (EUR), British Pound (GBP), and Japanese Yen (JPY). The exchange rate is the price of one currency expressed in terms of another, such as how many US dollars it takes to buy one British pound.
Exchange rates fluctuate constantly due to factors like interest rate differentials, inflation rates, economic growth, geopolitical stability, and market speculation. The forex market is the largest and most liquid financial market in the world, facilitating international trade and investment.