Describe the structure and operations of foreign exchange market and understand tr mechanism behind currency movemen t and foreign exchange rates

The foreign exchange market, also known as the currency market, is a global decentralized market where currencies are traded. It operates through a network of banks, financial institutions, and individual traders who buy and sell currencies. The foreign exchange market operates 24/7, with trading taking place in different time zones around the world.<br /><br />The foreign exchange market operates on the principle of supply and demand. When the demand for a particular currency increases, its value also increases. Conversely, when the supply of a currency increases, its value decreases. This is because the value of a currency is determined by the demand and supply of that currency in the foreign exchange market.<br /><br />Currency and foreign exchange rates are determined by the relative value of two currencies. The exchange rate between two currencies is the price at which one currency can be exchanged for another. For example, if the exchange rate between the US dollar and the Euro is 1.2, it means that 1 US dollar can be exchanged for 1.2 Euros.<br /><br />The foreign exchange market operates through a network of banks and financial institutions that act as intermediaries between buyers and sellers. These institutions provide liquidity to the market, allowing traders to buy and sell currencies quickly and easily. The foreign exchange market is also influenced by a variety of factors, including economic indicators, political events, and market sentiment.<br /><br />In summary, the foreign exchange market operates on the principle of supply and demand, with currency and foreign exchange rates determined by the relative value of two currencies. The market operates through a network of banks and financial institutions, and is influenced by a variety of factors.