A Brief Explanation About Currencies
Currencies are usually defined as monies whose value is not based on any commodity or resource. Usually they are internationally recognized as an internationally recognized unit of account. A currency in this sense is currency in any state at any time when in circulation or use as a medium of trade, particularly circulating coins and banknotes. This definition of a currency may vary depending on the country or region in which the currency is issued. For instance, a British pound is accepted everywhere but a Canadian dollar is acceptable only in Canada. This is called the “floating market”.
Currencies are traded with other currency holders either directly or indirectly. They are also referred to as “fiat money” since their value is not based on any commodity or resource. Currencies are traded not only with each other but also with other countries, banks and central banks. When the value of one country’s currency compared with another country’s currency is expected to rise, a particular quantity of currency is issued and it becomes the local currency. Another example of a currency is the “dollar”, which is commonly accepted everywhere by citizens of the United States.
However, many people have become involved in the foreign exchange market because they want to make profits. There are those who choose the forex trading as a profession while others become mere traders who see the market phenomenon and opportunity in its true light. Whatever be the motive, foreign currency trading has become very popular in recent times and the market continues to grow with the vigor of globalization.