The foreign exchange is a broad term describing the markets and
variables that allow people from different countries to make
international financial transactions. For example, if investors in the
United States want to buy shares of a company based in a member country
of the European Union, they will first need to find out how many Euros
each dollar is worth. Once the value is determined, which is called the
exchange rate, they can then determine how many shares of the company
they are able to buy. This process of converting one country's currency
into another's is the driving force behind the foreign exchange and its
financial markets.
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