Full Explanation
The Foreign Exchange (FX or FOREX) market is the decentralized global marketplace where currencies are traded. It determines exchange rates between different currencies. The FX market is the largest financial market globally, with trillions traded daily. Exchange rates fluctuate based on supply and demand, economic indicators, geopolitical events, and interest rates.
Frequently Asked Questions
Supply and demand, interest rate differentials, inflation expectations, political stability, and economic growth.
Major pairs fluctuate 1-2% daily. Emerging market currencies can be 2-5% volatile daily.
Yes, through forward contracts. You can lock rates for future settlement (up to 12 months).
Mid-market rates are neutral. Most providers add 0.5-2% margin. Banks typically 1-2%.