Foreign Exchange Market (FOREX)
Definition
The foreign exchange market, also known as FOREX, is where currencies are bought and sold. It is a decentralized global market that determines the exchange rate between different currencies.
Analogy
Imagine the foreign exchange market as a bustling marketplace where people from all over the world come to trade their local currencies. Just like how you would exchange your dollars for euros when traveling abroad, the FOREX market facilitates these currency exchanges on a larger scale.
Related terms
Exchange Rate: The value of one currency in terms of another currency.
Currency Appreciation: When a currency increases in value relative to other currencies.
Currency Depreciation: When a currency decreases in value relative to other currencies.
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