Foreign exchange market

The document provides an overview of the foreign exchange market, including: - The foreign exchange market allows buyers and sellers to exchange currencies from different countries through an over-the-counter network. Major currencies like the US dollar are highly liquid and traded globally. - Key participants include central banks, commercial banks, companies, traders, and brokers. The market operates 24/7 through electronic networks and transactions include spots, futures, forwards, options and swaps. - Factors like inflation, interest rates, monetary policies, and economic performance impact exchange rates. The market facilitates international trade and investment while also providing hedging against currency risk. However, leverage and counterparty risks are disadvantages.