The Foreign Exchange Market Essay

The Foreign Exchange Market Essay

Length: 1006 words (2.9 double-spaced pages)

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1.0 Introduction to Foreign Exchange Market
There is one thing that differentiates the international business with the domestic business where it uses more than one currency in the commercial transaction. For example, if a company from British purchases some goods from a company from US, the international transaction will require for exchanging pounds and U.S. dollars which involve the foreign exchange market. In the foreign exchange market, any country that wish to do business with foreign country, the country need to convert their domestic currency into the foreign currency that they are wish to cooperate with through foreign exchange.
The foreign exchange markets allow the conversion of currencies, where it helps the firms to conduct trade more efficiently across the national boundaries. In addition, firms can shop for low cost financing in capital markets all over the world and then use the foreign exchange market to convert the foreign currency that they got into whatever currency they require. With the foreign exchange nowadays, anyone can go to other country by converting their domestic currency into the foreign currency. The foreign exchange will follow the rate of exchange according to the country's rate. But still, the foreign exchange market is actually dealing with fluctuation where sometimes it has upward and downward movement.
2.0 Function of Foreign Exchange Market
The foreign exchange market is one of important mechanism in the international business because foreign exchange is an intermediary for all nations in term of the growth of the economy. There are many functions of foreign exchange market in the global economy. In the international business, it uses the foreign exchange markets in four ways. First, the pay...


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...rch 2014. Available at: http://www.wisegeek.com/what-is-hard-currency.htm#didyouknowout Retrieved at 6th April 2014
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Japanese Yen, Japanese yen: Indestructible Asian currency, 21st March 2012. Available at:
http://english.pravda.ru/business/finance/21-03-2012/120845-japanese_yen-0/ Retrieved at 6th April 2014
What Forex Traders Need to Know About the yen, Investopedia, 2013. Available at:
http://www.investopedia.com/articles/forex/japanese-yen-what-fx-traders-should-know.asp Retrieved at 6th April 2014
Japan’s rising yen and the decline of the US dollar, East Asia Forum, 2011. Available at:
http://www.eastasiaforum.org/2011/10/01/japan-s-rising-yen-and-the-decline-of-the-us-dollar/
Retrieved at 7th April 2014

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