What Is The Definition For Foreign Exchange?

Foreign exchange is defined as the trading of currencies in a specialized market which is known as foreign exchange market. In the trading of currencies, one currency is exchanged against another currency which shows that how much value one currency holds against an other currency. This value is known as foreign exchange rate. For example, how many pounds come in one US dollar or how many US dollars can be purchased with one British pound. Foreign currencies are traded in the foreign exchange market and it is one of the largest and most liquid financial market. Foreign exchange market is not an organized market like stock market but it is just like the over the counter markets. The institutions which make currency tradings include banks, currency speculators, government, and corporations.