The Foreign Exchange Market, better known as FOREX is a world wide market for buying and selling currencies. FOREX handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US dollars). In comparison, the United States Treasury Bond market averages $300 billion a day and American stock markets exchange about $100 billion a day.
The Foreign Exchange Market (FOREX) was established in 1971 with the abolishment of fixed currency exchanges. Currencies became valued at ‘floating’ rates determined by supply and demand. The FOREX grew steadily throughout the 1970’s, but with the technological advances of the 80’s FOREX grew from trading levels of $70 billion a day to the current level of $1.5 trillion.
The FOREX is made up of about 5,000 trading institutions such as international banks, central government banks (such as the US Federal Reserve), and commercial companies and brokers for all types of foreign currency exchange. There is no centralized location of FOREX – major trading centers are located in New York, London, Hong Kong, Tokyo, Singapore, Frankfurt, and Paris, and all FOREX trading is by telephone or over the Internet. Businesses use the market to buy and sell products in other countries, but most of the activity on the FOREX is from currency traders who use it to generate profits from small movements in the market.
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-Market capitalisation of major banks and finance houses listed on New York Stock Exchange : $16 Trillion or 15 times the total write-offs related to the housing mess. -Total bond market liquidity worldwide: $45 Trillion ... Now US homebuyers can purchase valuable assets at reduced prices with reasonable interest rates on a variety of loan and mortgage vehicles. The market in other words is clearing the over supply of housing stock at rational market rates. ...