The answer is simple – there is no exact central location of the Forex market. The market transactions are realized all over the world, in many different forms, 24 hours a day. There are several areas where a Forex exchange market could be situated – retail forex brokers, central banks, commercial businesses or banks. There is no central body that controls the prices and actions of the biggest part of investors.
Retail Forex Brokers
Such brokers offer to the individual retail trader the opportunity to speculate on the market. In comparison with the total volume of the world exchanged currency, this area of the forex market is very slight.
Usually, central banks control their money supply, interest rates and inflation, as they buy or sell particular currencies. It is no secret that nations oftentimes have as a target a couple of exchange rates for their currencies. Their central banks are able to stabilize their currency market, using reserves of local and foreign currency.
If a company or any business institution wants to buy or sell in a foreign nation, a foreign exchange transaction is being used. Some companies that are trading with foreign customers or suppliers, oftentimes take this one step further, and make a hedge against future exchange rate movement.
The interbank market takes the biggest portion of the forex exchange market, and it includes the above trading areas. Customers usually turn to the banks as a mediator to their foreign exchange transactions, and on the other hand, banks often trade their own accounts.