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Like everything else, they either already had pounds to sell, or they went to the market (ie, another seller) to buy pounds so they could resell them. The curr
by dkjaudyeqooe 4y ago
Like everything else, they either already had pounds to sell, or they went to the market (ie, another seller) to buy pounds so they could resell them.
The currencies themselves are merely entries in a (bank) ledger for an account denominated in the given currency.
The same with shares, options and other intangibles; they are records in institutions that are empowered to hold them.
- mikymoothrowa 4y agoTwo questions: 1. What/Where is this market? What’s the forex equivalent of NYSE or NASDAQ 2. Even If both the banks hold the other country’s currency, (which in most cases they won’t), how do they know what the exchange rate is.
- dkjaudyeqooe 4y agoFX is a shared or "distributed" market between the institutions that trade, such as big international banks and other market participants. They would use a shared electronic market (reporting) to determine the price. It's not exchange (as in NYSE) based. The exchange rate is set by what the market participants are willing to trade at. Banks can hold numerous currencies by having banking licences in the respective countries. See here for more details: https://en.wikipedia.org/wiki/Foreign_exchange_market https://en.wikipedia.org/wiki/Foreign_exchange_market