Foreign Exchange, often abbreviated as Forex or FX, refers to the global marketplace for trading national currencies against one another. It is the largest and most liquid financial market in the world, where currency pairs are traded. The primary purpose of the foreign exchange market is to facilitate international trade and investment by allowing businesses and investors to convert one currency into another.
Forex operates 24 hours a day, five days a week, with trading decentralized across various financial institutions, banks, corporations, and individual traders. It involves various participants, including central banks, commercial banks, hedge funds, corporations, and retail investors, each with different motivations for trading currencies, such as hedging against currency risk, speculating on price movements, or facilitating cross-border transactions.
The currencies in the foreign exchange market are typically quoted in pairs, such as EUR/USD (Euro/US Dollar) or GBP/JPY (British Pound/Japanese Yen), where the first currency is the base currency and the second is the quote currency. The exchange rate represents how much of the quote currency is needed to purchase one unit of the base currency. Overall, the foreign exchange market plays a crucial role in the global economy by enabling currency conversion for international trade, investment, and tourism.
The Turkish Lira's current fluctuations against the Japanese Yen are capturing investor attention due to recent interest rate cuts and geopolitical developments. In a bold economic decision, Turkey's Central Bank…