International/foreign currency exchange is a term which is often used interchangeably with forex trading. Even though they are connected, there are some important differences between the two, however, and they shouldn’t be confused.
International/foreign currency exchange is the process of exchanging one currency for another within a minimum of risk Managing Currency Exposure - MFX, undertaken on behalf of a business or private client engaged in overseas trade or other investments. This might involve a single transaction or a sustained run of payments, where a range of currencies are used, e.g., exchanging sterling for dollars or euros to rand.
On the other hand, the focus of forex trading is on currency trading and speculation, where currencies are bought and sold, with the aim of profiting from any exchange rate fluctuations.
Nevertheless, it is easy to see why the two concepts can get confused with one another, because they are both dependent upon one key ingredient – currency exchange rates.
How does International Currency Exchange Work?
Here are the basic mechanics. International/foreign currency exchange is the process of converting one currency into another for various reasons, e.g., import and export trade, Property Sale - MFX and overseas probate. The exchange rate determines the value of one currency relative to another.
The currency exchange can be facilitated through various channels, including specialist payment providers, banks and online platforms. Exchange rates fluctuate, with one currency constantly changing against another. This is down to supply and demand in the forex market and this can be influenced by a number of factors – the state of the world or regional economies at the time, political stability and general market sentiment.
What is Forex Trading?
Forex trading, also referred to as foreign exchange trading, involves the speculative buying and selling of currencies on the global foreign exchange market. The aim is to profit from any exchange rate fluctuation. The forex market is one of the most traded markets worldwide, operating across time zones, 24 hours a day, 5 days a week.
In Summary
Currency exchange is the process of converting one currency into another Need an exchange specialist? - MFX, whilst forex trading is the market through which currencies are traded, with the aim of making a profit.
If you have responsibility or requirement for making international currency payments – either as a one-off event or on a more frequent basis - MFX Ltd can assist you every step of the way. Established in 2014, MFX is a dedicated Isle of Man FX brokerage Get your FX comparison - MFX.
MFX is partnered with one of the world’s leading FX specialist providers, who have their finger on the pulse when it comes to achieving the most competitive exchange rates for businesses and high net worth private clients. Transaction costs are totally transparent and transfer fees are always kept to the absolute minimum.
To find out more or to arrange a non-obligatory appointment, either call MFX directly on 01624 694722 or email david.shimmin@mfx.im.
MFX Ltd is a wholly owned subsidiary of the AIM-listed Manx Financial Group and a sister company of Conister Bank.