We have heard of the term forex many times, especially in the financial arena. When we speak of currency, we refer to any official foreign currency that is different from ours.
In the case of Spain, the dollar, the British pound, the yen, the Swiss franc ... are examples of foreign currencies. Therefore, the Euro would be the national currency. The concept of "currency"refers to the metal or paper that represents an amount for which a good or service can be bought. The concept of" currency "refers to the currencies of countries other than ours.
Currencies are considered afinancial asset. It is also a liquidable asset, since it is very easy to convert into another good or service. Since it is an asset, it is listed on the foreign exchange markets, making the price vary up or down with respect to another reference currency. The reasons for this to happen are various, as they may be due to favorable or unfavorable factors of the country of the currency or the country that the currency is taken as reference.
It can also happen that a currency is in high demand compared to others, which can modify its value more or less compared to other currencies.
The forex market (Forex ) is the place (physical or not) where currencies from different countries are traded for others from other countries. It should be noted that when foreign currencies are acquired, it does not mean that said currencies leave the country of origin, but rather that there is a change in ownership from the bank of the currency to the bank of the national buyer.
Currency types
In this sense, there are some types of currencies that differ from one another. We find:
- Convertible currencies. That can be converted into other currencies almost without problems.
- Non-convertible currencies. Whose conversion is more difficult or almost impossible, since it is not accepted in the foreign exchange market.
- Bilateral currencies. They are used by countries that have signed a bilateral agreement to settle certain operations.
- Strong currency. It refers to countries whose economy is strong enough for the stability of the price of the currency to be adequate.
- Exotic currency. Whose international scope is not usually broad.
Forex market