Financial Times Guide to How the Stock Market Really Works, 5th Edition

6

Foreign exchange

Britain enjoys a relatively strong currency and, unlike many other countries, the regulatory framework discourages private individuals from trading in foreign currencies, so most private UK investors do not participate. However, it is important for all investors to understand the principles of foreign exchange, or ‘forex’, and to appreciate its importance when, for example, you are working overseas or own property abroad.

In recent years the worldwide market for forex has grown substantially because of the global trend towards financial deregulation; many countries now allow any currency to be freely held and exchanged in accounts within their borders. This makes investing in other countries and doing business with foreign ...