Currencies Are Very Important to Dealers on the Forex Market
A currency in the strictest sense is currency in circulation, particularly circulating foreign coins and banknotes when in use. A currency is always accepted by a nation as legal tender and it is usually held as the unit of account of that nation. A nation that does not accept the currency of another nation can be considered a bankrupt and defenseless country as they do not have the means to back their money with anything but paper. For this reason, a certain amount of foreign currency must be held in reserve to enable the government of a nation to be able to make necessary purchases in foreign nations. It may also be necessary to hold foreign assets for rainy-day purposes or for unforeseen emergency situations.
Currencies are usually issued by governments either during the course of war or at times of emergency for reasons of national security. A country which has a stable economy and an ample supply of money can easily buy large quantities of gold coins which are usually issued by governments when there is an impending economic crisis. In such cases the bullion coins are usually issued in large quantities because no government will usually be in a position to print more money in order to finance the expenses of the country. Gold bullion coins are very common on the market today because they represent a high degree of physical wealth accumulation which is impossible to replace. For instance, if you owned 100 tons of gold and suddenly the value of your gold possessions were to plummet overnight, you would still be able to purchase more gold bullion coins because they are the only safe investment currently available.
The other type of currency is the US Dollar. The currency used on the market is always issued by a central bank in order to control the supply of this particular currency. An example of this currency is the US Dollar, which is usually issued in denominations of a single US Dollar coin. When you are dealing with currencies you are dealing with units of account rather than tangible personal property because they are created as a result of transactions on the Forex market. Every transaction on the Forex market is processed via a computer terminal therefore all that is required for you to purchase or sell currencies is the availability of a computer terminal and Internet connection.