Definition of a foreign exchange market
At its core, a foreign exchange market is a global decentralised or over-the-counter (OTC) marketplace where participants trade currencies. In simpler terms, it's the place where one country's currency is exchanged for another's. This market operates 24 hours a day, five days a week, allowing for continuous trading across different time zones.
The primary purpose of the foreign exchange market is to facilitate international trade and investment. When businesses and individuals engage in international transactions, they often need to exchange one currency for another. This market enables them to do so, ensuring the smooth flow of goods, services, and capital across borders.
