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Economics of $6.6 Trillion/day Foreign Exchange Market
The foreign exchange market is one of the most influential markets in the world. Today, the New York Stock exchange, the NASDAQ, and the Tokyo Stock Exchange are the three largest security markets in the world. They have a daily trading volume of around 300 billion USD combined. The foreign exchange market has a daily trading volume of around 6.6 trillion USD per day, according to the bank for international settlements, which is basically the central bank for central banks. This daily figure is more than the annual GDP of two of the largest nations on earth, China and the USA. So, what is going on here? Beyond tourists changing their money out to go shopping on holidays, why does this market even exist?
Well, in this article, I want to explore three things.
- Why are foreign exchange markets so large and influential?
- Who actually conducts these trades and how?
- Why is it that the UK pound is so valuable compared to all other currencies?
Globalization — And the impact on local currencies
We live in an increasingly globalized world. Every day, businesses are more and more reliant on global supply chains to ensure that products and services are produced and provided in the best country possible. If…
