Foreign Exchange


DEFINITION of 'Foreign Exchange'

The exchange of one currency for another, or the conversion of one currency into another currency. Foreign exchange also refers to the global market where currencies are traded virtually around-the-clock. The term foreign exchange is usually abbreviated as "forex" and occasionally as "FX."

BREAKING DOWN 'Foreign Exchange'

Foreign exchange transactions encompass everything from the conversion of currencies by a traveler at an airport kiosk to billion-dollar payments made by corporate giants and governments for goods and services purchased overseas. Increasing globalization has led to a massive increase in the number of foreign exchange transactions in recent decades. The global foreign exchange market is by far the largest financial market, with average daily volumes in the trillions of dollars.

  1. Foreign Exchange Market

    The market in which participants are able to buy, sell, exchange ...
  2. Authorized Forex Dealer

    Any type of financial institution that has received authorization ...
  3. Spot Exchange Rate

    The rate of a foreign-exchange contract for immediate delivery. ...
  4. Equity Linked Foreign Exchange ...

    A put or call option that protects an investor from foreign-exchange ...
  5. Base Currency

    The first currency quoted in a currency pair on forex. It is ...
  6. Forex - FX

    The market in which currencies are traded. The forex market is ...
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