Foreign Exchange Markets

One of the functions of money is to act as a medium of exchange. However, since the emergence of trade between countries with different sovereign currencies, currency itself has become an object of trade, and transactions in different currencies have shaped the foreign exchange market. If you want to travel to a foreign country or go abroad for further study, you will participate in foreign exchange market trading. Foreign exchange markets facilitate not only the normal operations of import and export enterprises, but also the travel of residents to foreign lands for leisure or learning. At the same time, since there are fluctuations in the exchange rates, there is a chance for returns and risks, and some enterprises, institutions and individuals will often become extensively involved in foreign exchange market trading to reap the benefits of exchange rate fluctuations. From a broader perspective, the development of a country's (region's) foreign exchange market reflects the degree of the country's (region's) financial development, financial openness, and the domestic financial market's position in the global financial system. After introducing capital markets and money markets, this chapter will introduce the foreign exchange market.