Economics 101: Foreign Exchange Market | SterlingTerrell.net

Economics 101: Foreign Exchange Market

What is the foreign exchange market?

The Foreign Exchange Market is an international market where currencies from different nations are bought and sold.

Why does it exist?

Say an American firm need to buy steel from a firm in Germany.

German companies will not accept payment in US dollars.

Therefore the American firm goes to the foreign exchange market, and uses Dollars to buy Euros, so they can pay their bill.

Globally, this process happens millions of times per day.