2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Currencies are exchanged through buying and selling on the foreign exchange market. The currency market itself is a system that provides the necessary socio-economic and organizational moments needed for trading currencies. The global foreign exchange market is primarily a competitive market, which means that a large number of participants are constantly present on it. Unlike currency exchanges, where traders earn from the difference in rates, the market is about economic relationships between importers and exporters of goods. They are also known as the primary market players and are in charge of creating basic supply and demand.
As for the traders mentioned above, they consider the currency as a commodity, and they trade the currency in order to make a profit. It should be noted that it is this activity that characterizes the modern foreign exchange market to the greatest extent. Now 9 out of 10 deals are just buying and selling with the aim of making money on the difference in rates, at the same time on trading operationsaccounts for a relatively small market volume.
According to the classification, the world currency market can be called multi-level. This means that it consists of national, regional and international markets. At the national level, banking systems are the means of carrying out transactions. The regional foreign exchange market is a place where hard currency and local currencies are bought and sold. The three main such markets are continental, representing Europe, Asia and America. Each of them has several financial centers. The volume of transactions every day is hundreds of billions of dollars. Above the regional ones is the international market, which, in fact, is their combination. Money is constantly moving between markets, which is explained by the change in quotes - as a result, the balance is always maintained at the international level.
One of the main concepts used by the world currency market is convertibility. The currency can be freely convertible, partially convertible, or non-convertible. The better this indicator, the more demanded the currency is in the markets of various levels. Today, there is not much hard currency - it is the US dollar, euro, Swiss franc, pound sterling, Japanese yen and some other currencies. In particular, the Chinese yuan may soon take the lead, but so far this is not happening due to the specific monetary policy of China - its currency is artificially restrained from strengthening.
SLE not onlycirculate freely on markets of all levels, but also act as a reserve in most states, along with precious metals. If the currency is partially converted, it rarely leaves the regional market. An example of such a currency is the Russian ruble. Non-convertible currencies, for various reasons, can only be used within a certain country. One of the most striking examples to date is the North Korean won. The closed nature of the country's economy leads to the fact that the world currency market does not consider the won as a means of payment.
Recommended:
Currency restrictions are Features of the functioning of the foreign exchange market
This article describes the phenomenon of currency restrictions, their functions, principles, reasons for the introduction and purpose. It also reflects the features of currency restrictions in Russia and their relationship with the trade and payment balance of the country
Gold and foreign exchange reserves of the countries of the world. What is it - a gold and foreign exchange reserve?
Gold and foreign exchange reserves are the reserves of foreign currency and gold of the country. They are kept in the Central Bank
Analysis of the foreign exchange market
Every person who tried to make money on currency trading has no shadow of a doubt that the Forex market is superior in its volatility and turnover to any stock, commodity, commodity or any other exchange. Every day, Forex traders have to monitor a large amount of various data, follow important news and compare information received from different sources with various forecasts, which often also contradict each other
Foreign exchange market analytics: accurate forecasts
The currency market itself was originally created to ensure banking operations between different countries. Forex is a market, or rather, one of its components, enabling traders to make a profit by selling and buying currencies. Like any market, Forex is a clear mechanism that obeys its own rules and laws. The trader's task is to predict the price movement for a particular currency pair
When will the dollar fall? How to analyze the situation in the foreign exchange market and understand: the dollar will fall or rise?
The dollar is the world's main reserve currency. Experts allow a variety of forecast options as to whether the “bucks” will rise in price, or, conversely, will lose in price
