Trading currencies

As a Forex (Foreign Exchange market, FX market, including forex, currency market) is the global market in which currencies (or currency denominated short-term claims, so-called foreign exchange) are traded. Supply and demand of foreign currencies meet here. The foreign exchange market has a daily turnover of around 4 trillion U.S. dollars in 2007 [1] of the largest financial market in the world. This is not a commitment to a fixed exchange, but the market is caused by a worldwide network of interbank relations. The trading of foreign exchange takes place mostly by telephone or telex.

A foreign exchange transaction involves the simultaneous buying and selling of different currencies in the interbank market. This form exchange relationships, so that the value of each currency in each other can be expressed. On the foreign exchange market is thus the nominal exchange rate as the price ratio between two currencies.

Pricing in macroeconomic theory

The offer, the net foreign investment which, in other words the supply of foreign exchange demand. They are independent of the real exchange rate (only dependent on the real interest rate on the credit). The demand comes from net exports established, so the demand for foreign exchange offer. From the market equilibrium results in net exports = net foreign investment. Foreign exchange and credit depend on foreign investment.