What Is Forex?

What this unit covers

Meet the foreign exchange market and the idea that a currency is always priced against another currency, never alone.

By the end you will be able to

• Explain why a currency's value only exists as a comparison to another currency.
• Describe what forex is and what it means for currencies to be quoted in pairs.
• Recognise that a currency can move differently against different currencies at once.

How it starts: One Number, Two Currencies

1. A news alert says the rupee has fallen sharply this week.
2. You check two rates, one rupee against the dollar and one against the euro.
3. The two numbers moved by different amounts, so which one is falling?

Words you will meet

Forex

The global market where currencies are exchanged and priced against each other.

Base currency

The first currency in a pair, always equal to one unit in that quote.

Quote currency

The second currency in a pair, showing how many units equal one unit of the base.

In this module: Currency Markets

1. What Is Forex? (this unit)
2. Major Currency Pairs
3. Why Exchange Rates Change
4. Currency Futures & Hedging Basics