subject: Foreign Currency Exchange Services [print this page] Foreign currency exchange is a service that is provided by financial institutions and banks across the globe. You can either buy or sell your foreign currencies through these exchanges. There are also transactions that happen in foreign currencies between financial institutions and multinational corporations. You can even transfer foreign currency through these services.
What is Forex?
Foreign exchange (forex) rate is the worth of a foreign currency with respect to your home-nation countrys currency; it shows the value of one currency in comparison with the other. The term current ex-rates (exchange rates) and spot ex-rates are interchangeable, however there is something called forward ex-rates wherein you can make the payment on a future date based on todays rate. You can transfer foreign currency either by using your credit card or through wire transfer. You can transfer your money through these means to any person or organizations/institutions; but wire transfer is a better option when you need to transfer money between two bank accounts.
Characteristics of Forex
An important feature in business foreign exchange is the large financial institutions involved in daily trade. There are trading centers across the world, located in Hong Kong, Tokyo, Singapore, London and New York. Trading takes place at these centers on a daily basis (except weekends) and continues throughout the day. The trade sessions end one after another, beginning with Asia followed by Europe and then North America. The exchange rate differs depending upon the bank, the location for exchange and the market. Thus, the exchange rates are dynamic in nature, without a single rate. There are different prices/rates for each currency; this is also because the market has a feature called over the counter trading.
Factors Contributing To Forex Rates
Forex are influenced mainly by political events/conditions, globally as well as locally; economic indicator like policies, reports, conditions. Also, the forex rates are influenced by the market and its trading perception.
Foreign currency exchange follows a simple demand-supply rule when the demand is higher than the supply, the currency has higher value. However, when the demand is lesser and supply is more then the value of a currency drops.
