Foreign Exchange and Risk Management 4 Sem AKTU

1 Foreign Exchange and Foreign Trade 

•Foreign exchange (forex or FX) and foreign trade are two interconnected concepts that play a crucial role in the global economy. Here’s a breakdown of each and how they influence each other:

•Foreign Exchange (Forex):

•Definition: Forex is the market where currencies are exchanged for one another. This exchange happens at a specific rate, known as the foreign exchange rate.

•Key Players: Individuals, businesses, governments, and central banks all participate in the forex market for various reasons.

•Functions: The forex market facilitates international trade and investment by enabling currency conversion. It also allows for speculation on currency movements, which can be a source of profit or risk.