The foreign exchange market is where currencies are bought and sold from "summary" of International Financial Management, Abridged Edition by Jeff Madura
The foreign exchange market is a critical component of the global financial system. It serves as a marketplace where different currencies are traded, allowing businesses, investors, and governments to exchange one currency for another. This market is essential for facilitating international trade and investment, as it enables parties to conduct transactions in different currencies. One of the primary functions of the foreign exchange market is to determine the exchange rate between two currencies. The exchange rate is the price at which one currency can be exchanged for another, and it fluctuates based on various factors such as supply and demand, interest rates, inflation, and geopolitical events. These fluctuations in exchange rates can have a s...
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