Foreign exchange, often referred to as forex or FX, is the process of converting one currency into another. It involves the global market where currencies are traded between individuals, businesses, banks, and other entities.

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This market determines the exchange rates, which represent how much one currency costs in terms of another, and these rates fluctuate constantly due to supply and demand influenced by economic, political, and psychological factors.

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The foreign exchange market is decentralized and operates 24 hours a day during weekdays, making it the largest and most liquid financial market in the world with daily trading volumes reaching trillions of dollars. Currency trading is essential for international trade and investment, allowing businesses to convert currencies to pay for goods and services across borders.

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