Question

what are foreign exchange markets? why are they essential to a modern system of international trade and finance?

Answer 1

Foreign exchange markets is nothing but a market place that actually gets to decide what is the exchange rate between the currencies whether they have appreciated or depreciated with respect to other currency on the whole and this gives the participants to sell or buy buy a particular currency for another currency on the whole.there in the essential to modern system of International Trade and finance because everything currently is dependent on foreign exchange markets and the shows their relevance where if one country's currency is actually appreciating then and there is a decrease in the balance of trade deficit which is a sign of healthy economy and vice versa as well and this decides the level of trade and financing of a country.