Many people all over the world buy and sell global currencies (e.g. Euros, GBP and Yen), and they do this every day for a variety of reasons.

Some common reasons for currency trading include:

Travelling abroad 

e.g. for a holiday or when emigrating. Someone in the USA for example, going on holiday to Spain would need to sell some dollars and buy Euros which they can spend when abroad. Similarly, a person returning home from abroad may want to sell their left over foreign currency and buy back their usual home currency.

Making a particular purchase

e.g. a holiday home abroad or a product on the internet where payment is only accepted in a certain currency (e.g. US dollars) rather than your home currency (e.g. Chinese yuan).

Importing and Exporting

A UK business exporting goods to Japan, for example, would have to convert its earnings in Yen to its domestic currency of pounds .

To profit from fluctuations in exchange rates

e.g a trader may buy Euros at a particular price, watch the currency market prices, and then sell their Euros for another currency when exchange rates are favourable, to make a profit.

What is Forex? >>