Foreign Exchange Market

The general function of the world's foreign markets are to determine the exchange rate based on the basic principles of supply and demand. The exchange rate is necessary for the economy due to projected growth with imports and exports. In this paper I will discuss how the world's major foreign exchange markets functions. Also I will touch on the principles of the gold standard.
Some factors that needs an exchange rate that is a positive influence on an economy is the international trade, the demand for that country's dollar through exporting firms in the same country, foreign investment and employment. Currency is one of the most important factors in trade. The value of money is different in practically every country. Currency decreases and increases in certain parts of the world which effects the changes of value on certain goods. The currency value is determined by the purchasers of the currency. Most of the purchasers are travelers, foreign exchange traders and the government. The price at which the willing buyer and seller come to an agreement is the fair market value. There are approximately one hundred and eighty different currencies in the world that are all based on certain factors. The U. S. dollar is the most dominant currency in the world's transactions. We have World War II   to thank for that. War is one of the most important factors to consider when setting the value of currency. Conflicts and war with other countries shows strength, stability, and the value of its currency.
The gold standard is best described as the commitment with participating countries to set the prices of their domestic currency in terms of specific amount of gold. Although is may be thought of as only a medium of exchange and may have value of its own, money is also thought of as a commodity. Other commodities such as silver, oil and gold can be determined by government action. As a commodity, the price of money is mostly determined by the current international trade and...