If you are a business that has international suppliers, clients or employees, you will know that you will need to exchange your national currency for another one in order to make payments or convert income. These exchanges take place in the foreign exchange market.
The foreign exchange market, or Forex market, is widely considered to be one of the most liquid markets in the world, with more than $6 trillion being traded every day. Also known as the FX market, it is made up of a vast network of banks, commercial companies, investment firms, hedge funds, as well as retail investors and forex brokers. It is a global marketplace where people and institutions exchange one currency against another. The foreign exchange market is not controlled by a central bank or regulatory institution.
Understanding what forex is and how it works is essential when transferring funds overseas and especially if you are a professional trader trading in forex.
What does it mean exchanging or converting currencies?
When we talk about exchanging or converting currencies, we refer to the exchange rate, which is the price of one currency in relation to another one. It is the relative price of the specific two currencies or currency pair. A foreign exchange rate can be expressed as the number of units of the home or domestic currency per unit of the foreign currency. FX rates can also be quoted indirectly. If, for example, the exchange rate between the US dollar and the euro was on 20 July 2020 in Germany €0.900 and $1.110, then the first is a direct quotation and the second one an indirect one. This is because the first one is from the point of view of the domestic country of the euro.
Banks, foreign exchange companies, and international financial institutions provide forex services in exchange for a fee.
There are more than 170 currencies around the world, but everyone knows that the most popular currency that dominates the markets is the US Dollar or USD. The EUR or euro is also a well-known and widely used major currency accepted in 19 countries of the European Union. The GBP, Sterling or British pound, the JPY or Japanese yen (JPY), the Australian dollar (AUD) or Aussie, the Canadian dollar (CAD) or Loonie are also important currencies that are exchange regularly and traded in the forex market. What are known as majors, are the below currency pairs which account for around 75% of forex trading: EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, USD/CHF and NZD/USD.
If you are making an international bank transfer, it is good to seriously consider a currency exchange company such as Universal Partners FX. Currency transfers with UPFX are usually faster, cheaper and equally secure than any bank. You can easily send funds abroad without any hassle and without too many intermediaries.
If you’re thinking of repatriating your salary, buying or selling your overseas property, making an investment, or transferring funds from or to a foreign bank account, our dedicated customer support team or your personal account manager will explain everything you need to know about making a transfer effectively. You can also use our simple and user-friendly online platform to transfer your funds in a fast, secure and affordable way. Get in touch now with Universal Partners FX and find out how you can make the most of your hard-earned money.