University of Phoenix International Business Class

Topics: United States dollar, Foreign exchange market, Exchange rate Pages: 3 (1103 words) Published: September 27, 2010
Foreign Exchange Market
To ensure success in the international business market it is critical to understand how the foreign exchange market functions. Hernandez (2008) stated that, “The foreign exchange market, otherwise known as FOREX or "FX", has more currency circulating through it than the total amount of all the world's stock market” (¶ 1). The gold standard has played a major role in international dealings between various countries. In addition to the gold standard, the fluctuating currency rates also play a major role in international business and how the business is being conducted. The Foreign Exchange Market was established around 1971 and helped to promote international business on a monumental scale. It has been estimated that the gold standard was used from the periods of 1875 to 1914. The gold standard made a fleeting reappearance after World War II until President Nixon put a stop to the use of it. President Nixon’s decision is still in effect even though he is no longer in power. It is doubtful that the gold standard will ever be reinstated. There are several functions of the world’s major foreign exchange markets. In the Foreign Exchange Market, it is stated that “The Foreign Exchange market performs an international clearing function by bringing two parties wishing to trade currencies at agreeable exchange rates.” This function enables equal trading to occur between different nations or countries that use different currencies. This function also applies to people who are traveling for pleasure and has the need to exchange currencies. It is important that all parties involved in international dealings feel they are not being taken advantage of. As more countries feel confident with the competency of the Foreign Exchange Market then more countries will have the opportunity to become involved with business dealings and to prosper. “Thus, we can say that another function of the Foreign Exchange Market is the participation in the growth...
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