What is forex? Forex in general is a form of buying and selling one country's currency against the currencies of other countries. Interestingly, today's forex has become a very promising business field. For those of you who want to know more about forex, this article will provide a review of the understanding, function, and forex world players who hopefully can be additional useful information for you.
Understanding of Forex
Forex is basically a combination of 2 words in English that is "foreign" and "exchange". Foreign can mean "foreign" or "foreign" while Exchange can be interpreted as "exchange", in this case is meant is the exchange of currency. And when combined, forex or foreign exchange can be interpreted as a foreign exchange activities.
In one of the Wikipedia pages explain that forex in the Indonesian language is also known by some terms that is Forex Market or Foreign Currency. Both terms have the same meaning that is a trading activity that involves two currencies from different countries as the object of the trade. Deeper in the process of buying and selling the currency there is a role of the major money markets that exist around the world and last for 24 hours a day in sequence.
In turn, globally forex or forex market will start from New Zealand and Australia which happened at 05.00-14.00 WIB. The rotation will then move west towards the Asian market which took place at 7:00 to 16:00 pm, the next European market at 13:00 to 22:00 pm, and the last is the American market at 20:30 to 10:30 pm. After the American market is over, the turnaround will return to New Zealand and Australia markets, and so on.
Function of Forex Market
In the process, forex has several main functions that are very influential to the perpetrators. The function of forex is divided into 3 as follows:
1. To simplify the process of currency exchange.
As we know, in the daily economic activities of human beings sometimes require funds in the form of currency of other countries. Whether it's used in business, travel, shopping or storage.
The currency exchange can be done with a system called Clearing. One of the functions of forex is to provide such services. To simplify, examples of such services are foreign exchange services that you usually meet in various places, ranging from banks to the exchange of money in various places.
2. To do Hedging.
This is an act that is usually done by a forex trader as a "guarantee" that the value of investment funds is not reduced or loss when he sells forex in 2 different markets. In this case also play the banks, both domestic banks and foreign banks as US guarantor funds.
3. To do the arbitration.
Arbitration is the difference in the interest rate of 2 different currencies. And arbitration action is an act done to benefit from the difference of currency. This is simply done by buying a currency that is low in value in a country, and selling the currency in a country where the currency is high.
Performers In The Forex Market
There are several parties involved and give influence in the forex market or the term as a player in the market. Forex market players can be divided into 6 as follows:
1. Bank
Banks play an important role in the forex market. Interbank money market plays a role to meet almost all of the needs of the sale and purchase as well as currency rotation in the field of global business. In performing its functions sometimes the bank will make the process of buying and selling currency on behalf of its customers. But in large quantities, then the transaction will be done on behalf of the bank itself.
2. Business Needs
The second forex market is the needs of the company or business actor when making payments using foreign currency. Basically a business sometimes requires funds in the form of foreign currency when making transactions, but in fact the direct influence is not too felt on the state of a currency.
It will be different results when discussing a large corporation. Here large corporations have a large and unexpected share if they engage in massive foreign exchange moves. When they let go, the market or the speculators could not expect it directly. As a result, the value of a currency can move up or down.
3. Central Bank
The Central Bank has the role of controlling the money supply, the occurrence of inflation and also related to interest rates. With its very important role, the Central Bank could have easily affected the development