Foreign Exchange (Forex) Market

Forex or foreign exchange market is one where currencies of different countries are
exchanged. It simply deals with exchanging of currencies of one country with those of
other countries. It involves cross border selling and buying of currencies and movement
of funds. Forex market is the world’s largest financial market and is also one of the most
volatile.
Foreign Exchange transactions take place between two countries on account of
(a) Imports/Exports of goods
(b) Trade in services viz. IT, Insurance, Shipping, Banking, and Consultancy etc.
(c) Remittances from other countries
(d) International travel
(e) Foreign aid, gifts etc.
(f) Repayment of foreign loans

From the bank’s point of view, foreign exchange transactions take place as:

• Sales: Bank gives foreign Currency and customer gives rupees
• Purchases: Bank pays rupees and Customer gives foreign currency

Foreign Exchange processes consist of remittance, other bills collection, traveler's
check, foreign currency, and Visa card transactions and supports stock management
and specialized process function related to these businesses.
There are nine major centers of foreign exchange trading. These are based in, London,
New York, Zurich, Frankfurt, Tokyo, Hong Kong, Singapore, Paris and Sydney.

World’s largest forex market is in UK. DEUTSCHE BANK is the largest trader
of foreign exchange.