The Value of a Currency
Currencies are traded in major financial centres across the world, including London, New York, Tokyo, and Hong Kong. This is done through a global network of banks and used by businesses, individual investors and central banks to convert one currency into another. While part of those transactions are executed for commercial purposes, to buy goods and services in a foreign currency or convert proceeds back into local currency, the vast majority of currency transactions are undertaken with the aim to try to achieve a profit.
The value of a currency tends to reflect the macroeconomic situation in the country they represent. If the economy of a country is improving, the currency of that particular country is likely to strengthen. Alternatively, if the economic situation deteriorates, the currency is likely to weaken. Trading currencies is a speculation on the economic health of one country compared to another.
