The Forex market is where supply and demand for Forex meet. Activities in the Forex market are Forex exchanges carried out by individuals or companies or governments, One of the best brokers in this field is PrimeXBT Forex.
The parties involved in the Forex market usually consist of commercial banks, central banks, Forex dealers, and Forex retail agents, including currency exchange or Forex service companies. The parties serve the sale and purchase of Forex.
Based on the book Fundamental Financial Management, the Forex market is connected globally where international financial centers are connected using existing communication technologies so that Forex transactions on an international scale can be carried out online. By doing it on PrimeXBT Forex all will guarantee that.
Also, read the best crypto trading platforms in 2022, this information is equally important
Forex Market Functions
According to the book International Financial Markets, there are three functions of the Forex market. Here is the function of the Forex market.
1. Purchase Power Transfer
Transfer of purchasing power from one country to another or you could say between different currencies is the main function of the forex market. The international clearing function performed by the PrimeXBT Forex market plays an important role in facilitating international trading and capital markets.
2. Credit Provision
International trade is largely dependent on credit facilities. Exporters may get pre-shipment and post-shipment credits. A credit facility is also available for exporters which are also done by PrimeXBT Forex.
3. Provision of Hedging Facilities
The Forex market provides hedging or hedging facilities. Hedging refers to the protection of export risk and provides a mechanism for exporters and importers to protect themselves against the risk of exchange rate fluctuations. Therefore PrimeXBT Forex Provides facilities that will protect customer values
The functions of the Forex market are summarized as follows.
• Simplify the process of Forex exchange and transfer of funds from one country to another thereby enabling international clearing.
• As a credit provider. The Forex market makes it easy to execute agreements or contracts of sale with a credit system.
• Limiting risk. The Forex market provides the possibility of hedging, i.e. limiting the risk against possible price changes.
• Speculation, i.e. in the Forex market, one can speculate, accept and seek risk for profit.
PrimeXBT Forex Market Structure
Based on the book Monetary Economics, the structure of the Forex market is an outgrowth of the function of commercial banks, namely assisting customers in carrying out international trade.
If the Forex market is viewed in terms of market structure, the Forex market structure is an example of a perfectly competitive market structure, because there are many sellers and buyers of homogeneous products in the market.
Currency trading is carried out 24 hours a day following the movement of the sun around the world. Global Forex trading is divided into three main market segments, namely:
• The Asia-Australia zone which consists of Sydney, Tokyo, Hong Kong, Singapore, and Bahrain with times starting from 07.00 to 14.00.
• The European zone consists of Zurich, Frankfurt, Paris, Brussels, Amsterdam, and London with times from 13.00 to 23.00.
• The North American zone consists of New York, Montreal, Toronto, Chicago, San Francisco, and Los Angeles with times from 7:30 p.m. to 4 a.m.
The Forex market can be viewed as a two-tiered market. The first layer is the wholesale or interbank market and the second layer is the retail or client market. Participants in the Forex market are divided into five groups, namely international banks, bank customers, non-bank dealers, Forex brokers, and central banks.