Foreign Exchange markets was established when the floating exchange rates started to materialize. It is an inter-dealer or inter-bank market based from the numerous networks of major banks worldwide. It is also called an OTC or Over the Counter market because the transactions are done between any counter parties who agree to trade through an electronic network or telephone.
It is a market open for five days within a week and is open for business 24 hours. Today, all transactions in FX markets involve the seven main currencies including Japanese Yen (JPY), US Dollar (USD), Euro (EUR), British Pound (GBP), Swiss Frank (CHF), Australian Dollar (AUD), and Canadian Dollar (CAD). Currencies are usually traded versus the US Dollar in the FX markets. US Dollar is always quoted as the base currency except for the GBP, AUD, EUR and NZD or New Zealand Dollar. However cross rates also occurs. It is the exchange of rates between two currencies which is a non- US Dollar.