Foreign Exchange Markets
Foreign exchange markets set the value of currencies against one another, influencing the price of products and services worldwide. If one country has a cheaper or undervalued currency, it can produce and sell products to the world at a lower price. Read this section to learn more.
Glossary
- dollarize:
- a country that is not the United States uses the U.S. dollar as its currency
- exchange rate:
- the price of one currency expressed in terms of units of another currency
- foreign direct investment (FDI):
- purchasing more than ten percent of a firm or starting a new enterprise in another country
- foreign exchange market:
- the market in which people use one currency to buy another currency
- hedge:
- using a financial transaction as protection against risk
- portfolio investment:
- an investment in another country that is purely financial and does not involve any management responsibility