What is the purpose of foreign exchange markets?
A foreign exchange market, also known as the Forex or FX market, is a global network of currency traders connected via telephone and computer. The three main Forex markets are based in the United States, the United Kingdom and Japan, but there are no official headquarters for Forex markets.Trading CurrencyOne of the main purposes of foreign exchange markets is to exchange or trade an individual country’s currencies, according to GO Currency’s Forex for Beginners page. Business entities that use the Forex markets to trade currency include banks, brokers and other financial intermediaries, businesses and the central banks of governments.Business PurposesTo purchase goods or services, trade, invest or otherwise do business in a particular country, an individual or company based in another country must first purchase the country’s currency or an acceptable currency, according to the Federal Reserve Board. A good way to purchase currency is to work through a foreign exchange market.Banking
