In other words, the foreign exchange market is a 24-hour
Foreign exchange market is a market that bai24 does not stop for 24 hours. The most obvious difference between foreign exchange market and other du trading markets is the continuity in time and the unconstrained space in dao.
In other words, the foreign exchange market is a 24-hour non-stop market, with the main fluctuation and trading time starting from New Zealand on Monday and ending from Chicago on Friday. There are also a few Foreign exchange transactions in the Middle East on weekends, but they are basically negligible and belong to normal inter-bank exchange, not ordinary speculation. Therefore, to sum up, the foreign exchange market is an uninterrupted trading market. The foreign exchange market refers to the trading place where foreign exchange is bought and sold, or the place where different currencies exchange with each other. The foreign exchange market exists because:
1. Trade and investment: importers and exporters pay one currency when importing goods, and collect another currency when exporting goods. This means that they pay in different currencies when they settle accounts. Therefore, they need to exchange part of the currency they receive into currencies that can be used to purchase goods. Similarly, a company that buys foreign assets must pay in the currency of the country concerned, so it needs to exchange its own currency for the currency of the country concerned.
2. Speculation: The exchange rate between two currencies will change with the change of supply and demand between the two currencies. A trader can make a profit by buying a currency at one exchange rate and selling it at another more favorable exchange rate. Speculation accounts for the vast majority of foreign exchange market transactions.
3. Hedging: Due to the fluctuation of exchange rate between two related currencies, companies with foreign assets (such as factories) may suffer some risks when they convert these assets into the local currency. When the value of foreign assets denominated in foreign currency remains unchanged for a period of time, if the exchange rate changes, when the value of this asset is translated in domestic currency, profits and losses will occur. Companies can eliminate this potential profit and loss by hedging. This is to execute a foreign exchange transaction, and the result of which just offsets the gains and losses of foreign currency assets caused by exchange rate changes.