What is Foreign exchange market?
Foreign exchange market: Where currencies are traded.
Where Foreign exchange market fits
Foreign exchange market is part of Economy & Rates in Global Trade. Global economics links currencies, interest rates, inflation and investment. Exchange rates change what trade costs, and foreign direct investment means building abroad.
Practical tip
Hedge currency risk and watch central bank rates.
Related terms
- GDP
- Total value of goods and services a country produces in a period.
- Recession
- A period when the economy shrinks and jobs and sales fall.
- Interest rate
- The price of borrowing money, shown as a percentage.
- Inflation
- A general rise in prices that reduces what money can buy.
- Monetary policy
- Central bank actions on interest rates and money supply to steer the economy.
- Deflation
- A general fall in prices that raises money's buying power.
- Globalization
- The growing connection of economies and cultures.
- Currency devaluation
- A deliberate drop in a currency's value.
Formulas you will use with it
Test yourself
Which term means: “Where currencies are traded.”?
Monetary policy · Foreign exchange market · Globalization
Answer: Foreign exchange market
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