The Foreign Exchange Market - better known as
Forex - is a world wide market for
buying and selling currencies.
It handles a huge volume of transactions 24 hours a day, 5 days a week. Daily
exchanges are worth approximately $1.5 trillion (US dollars). In comparison, the
United States Treasury Bond market averages $300 billion a day and American
stock markets exchange about $100 billion a day.
The Foreign Exchange Market was established in 1971 with the abolishment of
fixed currency exchanges. Currencies became valued at 'floating' rates
determined by supply and demand. The Forex
grew steadily throughout the 1970's, but with the technological advances of the
80's Forex grew from trading levels
of $70 billion a day to the current level of $1.5 trillion.
The Forex is made up of about
5000 trading institutions such as international banks, central government banks
(such as the US Federal Reserve), and commercial companies and brokers for all
types of foreign currency exchange.
