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The term market has been interpreted in Economics as the place where both the buyers as well as the sellers meet and they buy and or sell goods. The foreign exchange market is a place where the transactions in foreign exchange are conducted. In practical world the external transaction requires the use of foreign purchasing power i.e. foreign currency. The foreign exchange market facilitates such transactions by performing number of functions. So it is the market where, The market where the commodity traded is Currencies. Price of each currency is determined in term of other currencies.
Types of Foreign Exchange Markets: 1. Forward Market: Settlement at some future date ahead of the spot. 2. Spot: Settlement on the deal date.