Purchase and Sales of Currencies
We can define the currency market as the space, the situation or the context where the exchange, sale and purchase of currencies from different countries called currencies takes place. Being a market, the price of currencies is determined by the supply and demand that exist for them.
Currency exchanges are generally made in major financial centers of the world London, New York and Singapore are some of the most important. The main participants in the foreign exchange market are banks, multinationals, non-bank financial institutions and central banks. In the case of banks, they carry out transactions between customer accounts at an international level. Banks generally specify the type of currencies used in their operations and transactions. In addition to carrying out transactions for clients, banks carry out operations with foreign currency as a business, since bank clients pay a retail price for them that is higher than the price at which banks buy them (since banks buy them “wholesale ”).
The difference in prices is the compensation that banks receive for carrying out this activity. Multinational companies, having a presence in several countries, negotiate with different currencies. Non-bank financial institutions, such as pension funds, when handling large sums of money, also trade in different currencies. Central banks are also actively involved in the foreign exchange market. The international reserves of the countries are mostly invested in foreign currency. Depending on the economies, the money in circulation in them and the economic policies, central banks decide or not to enter the foreign exchange market to buy or sell.
The foreign exchange market is characterized by its constant variation and by the constant demand for information by participants.
Business centers are generally integrated, allowing transactions between them to be done at any time, quickly and easily. The US dollar is a fundamental currency in this market. Many transactions between currencies are made with the intervention of the dollar.
This is what really dictates the price of a currency.
As can be seen, the money that is used today, whether it is called fiat or fiduciary money, does not matter, it is very far from fulfilling the role for which it was created, which has caused the bankruptcy throughout history of large companies It is money that causes millions of industrialists, manufacturers and producers to close their doors in the last 49 years, which ultimately brings unemployment and hunger for the general population..
As long as this type of money continues to be used, economic and social development can never be achieved, we will always face a crisis and in the end, it will be concluded that it is the money that we use directly and indirectly. As long as the real reason why money was created was forgotten and it was none other than for people to stop using barter.