If you’re living in France and want to visit Borobudur in Indonesia, you must exchange your France currency to local currency, in this case the Indonesian Rupiah, at the current exchange rate. Currencies are important, it’s able to conduct foreign trade and business.
The need of exchange currencies is the main reason why foreign exchange market is the most liquid market in the world. Forex trading usually divided into 3 ways. They are Spot Market, Forwards Market and Futures Markets.
Spot market is where currencies are bought and sold according to the current value. This value is determined by demand and supply, interest rates, economic indicators, political condition, and future performance on one currency against others. Forwards market trades in contracts of a certain currency type at a specific value and a future date. This trading type doesn’t trade in actual currency. Futures market actually has the same characteristis with forwards market, but settled over public comodities markets.
Source : NewTrading.Net
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