Currency

Strictly speaking, a currency is a monetary unit accepted by a foreign country, while "money" refers to the currency of one's own country.

It is most often issued under the control of a central bank (but can also be issued from a collective basket of multiple currencies, managed by an international organization backed by several independent central banks, where these funds are guaranteed by reserve deposits).

Each country has an official currency within its territory, which is expressed in various legal tender forms. However, several countries may:

• use the same currency (as is the case with the euro, used by member countries of the European Monetary Union, or Liechtenstein, which is in a monetary union with Switzerland—using the Swiss franc);
• adopt a foreign currency as their legal tender: as is the case with Panama and Ecuador (using the US dollar), or with the Vatican, San Marino, Monaco, and Andorra, and de facto with Kosovo and Montenegro (using the euro).

For practical reasons, a currency often has subdivisions, legal or traditional: 1/1000 (the millimes of the Tunisian dinar), 1/100 (the eurocents of the euro), 1/100 (euro cents of the euro), 1/20, 1/10, 1/8, 1/4 (the American quarter) for example. Read more: Wiki about Currency.

Exchange rate

The exchange rate of a currency is the cost (or price) of that currency relative to another.

Exchange rates quoted on foreign exchange markets fluctuate constantly; they also vary depending on the trading venue.

The exchange rate of the euro against the US dollar is quoted as EUR/USD (or EURUSD) = 1.3120 (meaning that 1 euro is worth 1.3120 US dollars), while the exchange rate of the dollar against the yen is quoted as USD/JPY (or USDJPY) = 101.2954.

The notations used (EUR = euro; USD = US dollar; JPY = yen, etc.) are governed by the international currency coding system—the ISO 4217 standard—which aims to distinguish each currency using a three-letter abbreviation.

Exchange Rate Regime

A currency's exchange rate is:

• either fixed—meaning constant relative to a reference currency (usually the US dollar or the euro)—by decision of the issuing state. In this case, the rate can only be altered through a decision by that state to devalue (or revalue) the currency. However, a state cannot simply choose any exchange rate it pleases; if it sets the rate too high or too low, the currency may come under "attack" in the foreign exchange market. If monetary authorities are unable to withstand such pressure (using their foreign exchange reserves), they will be forced to adjust the parity;
• or floating, determined at the time of each transaction by the balance of supply and demand in foreign exchange markets. This is a global interbank currency market that is increasingly decentralized—moving away from specific trading and quotation venues—as it relies on electronic links between banks.

The regime actually adopted by a country (*de facto* classification) does not always align with the officially announced regime (*de jure* classification), as many states in practice maintain a less flexible exchange rate than they declare

The exchange rate is:

• either a spot rate—meaning "for immediate delivery"—for the immediate purchase and sale of currencies. Generally, the currency delivery period is two business days, though this may be extended if delivery falls on a public holiday;
• or a forward rate—meaning "for future delivery"—for foreign exchange transactions with a future maturity date (where delivery does not take place immediately). The objective is risk management. It is an agreement to lock in, today, the price at which the currency will be bought or sold at a future date.

For more information about exchange rate, see Wiki Exchange Rate

Forex

Forex (short for foreign exchange market or FX)—or the currency exchange market—is the market where convertible currencies (currency pairs) are traded against one another at constantly fluctuating exchange rates.

Forex is the most heavily traded market in the world, with approximately US$9.595 trillion traded daily.

The institutions that exert the greatest influence on the Forex market are central banks and international bodies such as the International Monetary Fund.

This market, global by nature, is the world's second-largest financial market by total volume, ranking behind the interest rate market. However, it is the most concentrated and leads in terms of liquidity for the most heavily traded products, such as the euro/dollar pair: the average daily trading volume stood at US$9,595 billion in 2025, representing a 28% increase in volume compared to 2022. All subsequent figures are also drawn from the triennial survey of the foreign exchange market conducted by the Bank for International Settlements (BIS).

According to the latest BIS report from 2025, foreign exchange trading has risen by 142% since 2010, reaching $9,595 billion. The United Kingdom and the United States remain the dominant trading hubs, with market shares of 37.8% for London and 18.6% for the United States in 2025. France trails far behind, accounting for just 1.9% of global trading, down from 2.8% in 2013.

The US dollar remains the most traded currency, involved in 89.2% of transactions in 2025, up from 88.4% in 2022. The euro accounts for 28.9% of transactions—down from 30.6% in 2022—while the yen's share rose from 16.7% to 16.8% between 2022 and 2025. Meanwhile, the share of currencies from emerging markets increased from 17.6% to 19.4% over the same period.

For more information, Wiki Foreign Exchange Market