Foreign Exchange Explained
In the global market, we recognize that different companies have different needs and requirements. MTFX uses in-depth knowledge of the forex market, together with a range of financial services, to help you to get the most value for your foreign exchange dollar
The Foreign Exchange Market is the largest and most liquid in the world
The foreign exchange market is a network of financial institutions and brokers in which individuals, businesses, banks and governments buy and sell the currencies of different countries. They do so in order to conduct international trade, invest in foreign countries, or speculate on currency price changes.
The main participants in the forex market are central banks, commercial banks, other financial institutions, corporate customers and brokers.
The Foreign Exchange Market is open 24 hours a day
The forex market is open 24 hours a day, 7 days a week. Because of the decentralized clearing of trades and overlap of major markets in Asia, Europe and North America, the market remains open and liquid throughout the day and overnight.
All Currencies are not created equal
Every forex transaction involves a pair of currencies, (e.g. USD/CAD or EUR/USD). Only five primary currencies (USD, EUR, GBP, JPY and CHF) are heavily traded. Of these, the USD is the overwhelming leader, involved in 87% of all transactions. Active trading in a major currency pair, for example the EUR/USD pair which represents about 30% of the total forex market, will generate new price quotes every one or two seconds.
Foreign Exchange rate determinants
What are the determinants of exchange rates? Are changes in exchange rates predictable? These are fundamental questions that our customers ask us each day.
Unfortunately, there is no general theory of exchange rate determination. Instead there are economic theories that attempt to explain long-run exchange rate determinants. Numerous other variables appear to explain short- and medium-run exchange rate determinants. A major problem is that the same set of determinants does not explain exchange rates for all countries at all times, or even for the same country at all times. The diagram below provides a roadmap the potentially most important determinants that have surfaced in recent years.
