HOW DOES FOREIGN MARKETS WORKSolutionis it the question how

HOW DOES FOREIGN MARKETS WORK?

Solution

is it the question how does foreign exchange markets work?

foreign exchange market (Forex Markets) is a place where the currencies are avialable for buying and selling. there will be different players who sells the foreign currency there are some other who buys it.

usually when a nation is doing business with its foreign nations, the transactions should be happens in international currencies (like US dollar, UK pound or Euro) and some nations are interested to exchange with local currencies. when nations are going to pay amounts to the importers or nations receives money for its exports, the need for forex market arises.

take a simple example; India is importing Cruide oil from Saudi Arabia, and they expects the payments in US dollars only. they gives less preference to Indian currency. similarly India is exporting many software services to US and getting US dollars as payment. in this example, India receives dollars from US and pay to Saudi.

this is the simple way of forex need, and in this globalization market there are many nations which are doing business with its neighbor nations and the payments and receipts should be in an international perspective. the currency which has more demand world wide, usually it carries higher value or higher exchange value in market.