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An Introduction to the Foreign Exchange Market

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The foreign exchange market, or FX as it is widely known, is the largest trading market in the world by volume.

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An Introduction to the Foreign Exchange Market

  1. 1. FOREIGN EXCHANGE MARKET The foreign exchange market, or FX as it is widely known, is the largest trading market in the world by volume.
  2. 2. 2 Thibaut De Roux The foreign exchange rate is determined by this market and it is where all transactions involving the exchanging of currencies take place. An Introduction to the Foreign Exchange Market
  3. 3. 3Thibaut De Roux The FX market and the wider financial sector is in the process of being altered irreparably and permanently by the introduction of blockchain technology. CURRENCY CONVERSION International investments and trade are assisted by the FX market as it enables currency conversion. Typical transactions involve one party purchasing a specific quantity of a currency using a relevant quantity of another currency. As an exa- mple, this means that a business in one country can import goods from another country, even where the importing bu- siness operates using a different currency to the exporter. EXCHANGE RATES Exchange rates are set based on activity within the FX market and are dependent on a number of factors. These include rela- tive purchasing power parity, asset prices and balance of payment models. The FX market operates a floating exchange rate, unlike a fixed exchange rate which is set by the relevant government.
  4. 4. More on this topic can be found by visiting the blog of Thibaut de Roux.

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