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Foreign Exchange (FX)

Tom Kiddle

Tom Kiddle

Co-Founder•1 min read

Foreign exchange (FX) refers to the conversion of one currency into another, typically for trade, investment, travel, or international payments. It takes place on the global FX market, the world’s largest and most liquid financial market.

Exchange rates — the price of one currency against another (e.g. GBP/USD = 1.25) — fluctuate constantly based on supply and demand, interest rates, inflation, and economic or political events.

Businesses use FX services to buy or sell foreign currencies, manage risk through hedging, and settle cross-border transactions.

Example:

A UK importer paying a €100,000 supplier converts pounds to euros at the current GBP/EUR rate to complete the payment.

Used in:

International trade, investing, treasury management, and currency risk control.

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