The foreign exchange market allows individuals, businesses, banks, and institutions to trade one currency for another. Because nearly every international transaction involves currency conversion, FX markets operate 24 hours a day across major financial centers. Prices shift constantly as supply, demand, and global news influence how much each currency is worth.
FX trading happens mostly through banks, brokers, electronic trading platforms, and liquidity providers. Unlike stock markets, there is no single central exchange; instead, FX operates as a global network. This structure allows high liquidity, fast execution, and tight spreads for major currency pairs like EUR/USD or USD/JPY.
Currencies move based on interest rates, economic data, political events, and market sentiment. Some currencies are more stable, while others—especially in emerging markets—tend to be more volatile. FX is used for trading, investing, hedging, international business operations, and cross-border payments.
FX affects trade, investing, travel, and global business. Exchange rates influence import costs, international profits, cross-border investments, and economic stability.
Currency prices move based on interest rate expectations, inflation levels, employment reports, GDP growth, and central bank decisions. Political events and risk sentiment also play major roles, especially during periods of uncertainty. Because FX operates continuously, prices can react within seconds to new information. Traders monitor these factors to understand short-term and long-term trends.
Businesses rely on FX to convert revenue from overseas customers, pay international suppliers, or price products in multiple currencies. They also hedge currency risk using forward contracts or options to protect profit margins when exchange rates fluctuate. FX helps companies stay competitive globally by managing currency exposure efficiently.
FX is global and decentralized, with millions of participants trading around the clock. Major currency pairs see extremely high trading volume, which keeps spreads tight and execution fast. Even large orders can usually be filled quickly without significantly moving the price. This liquidity makes FX attractive for traders and institutions worldwide.
A European company earns revenue in U.S. dollars but reports financial results in euros. It uses the FX market to convert USD to EUR and may hedge future conversions to protect profits from exchange-rate swings.
FinFeedAPI’s Currencies API provides real-time and historical FX rates, helping users track currency movements, build FX tools, manage conversions, and analyze cross-border pricing.
