Forex refers to the foreign currency held by a country and the instrument of payment for international settlement.The concept of foreign exchange consists of static and dynamic divisions.To get more news about WikiFX, you can visit wikifx official website.
1. Static concept
The static concept of forex is defined as a mean of payment expressed in foreign currencies, which is a tool for international settlement. Such payment instruments include credit derivatives and securities expressed in foreign currencies, such as bank deposits, commercial drafts, bank drafts, bank checks, long and short-term government securities, etc.
2. Dynamic concept
The dynamic concept of forex refers to a specialized business activity, in which a country‘s currency pair is exchanged for another country’s currency in order to settle international claims and debts. It is an abbreviation for International Exchange.
Here, it is important to address that the currency of some countries cannot be freely exchanged in the international market, so it is regarded as foreign currency rather than foreign exchange. There are many traders who always mistake foreign currency and foreign exchange. This leads to the misunderstanding in national economy data releasing. The exchange rate is known as the price of one country's currency expressed in another country's currency or the ratio between the currencies of the two countries. For example, USD/ZAR=1/15.4234, the exchange ratio of USD to ZAR is 1:15.4234. It can be expressed that people can purchase 15.4234 ZAR for 1 USD.
What are the ways to engaging in forex？
1. Bank. At present, many banks can handle personal foreign exchange settlement, forex settlement of trading companies, and forex purchases for overseas travel expenses. Purchasing foreign currencies in a bank is the most common way in our daily life.
2. Platforms or brokers. Individuals or institutions that invest in the forex market can trade forex on the platforms. At present, there are numerous domestic companies developing open foreign exchange margin trading business in South Africa. If you want to conduct foreign exchange margin trading, you can find a broker to open a trading account.
Who are the market participants？
Participants in the forex market include central banks, commercial banks, non-bank financial institutions, broker companies, self-employed businesses, and large multinational corporations in various countries. They have frequent transactions and huge transaction amounts, and each order is counted in millions of dollars or even more than ten million dollars. Generally speaking, there are three motivations for their participation:
1, International companies convert foreign profits into their national currency.
2, Hedging, corporate finance ministers, and fund managers will also use the forex market to reduce the risk of price fluctuations in futures transactions.
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