In the finance industry, FX is shorthand for foreign exchange, which refers to the process of converting one currency into another. This can happen for various reasons, including international trade, tourism, and investment. When two parties engage in a foreign exchange transaction, they agree to exchange one currency for another at an agreed-upon exchange rate. This exchange rate is determined by the market forces of supply and demand, and it fluctuates constantly based on various economic factors.
Foreign exchange is a crucial aspect of the global economy, as it enables international trade and investment. Without FX, it would be difficult for businesses to conduct cross-border transactions, and for individuals to travel and spend money in foreign countries.