Global Foreign Exchange Market is expected to reach $10.2 trillion by 2026

Global Foreign Exchange Market is expected to reach $10.2 trillion by 2026

The Global Foreign Exchange Market is expected to reach $10.2 trillion by 2026, at a growing CAGR of more than 7%.

What is Foreign Exchange?

The foreign exchange market is over a counter (OTC) worldwide marketplace that regulates the exchange rate for monetary forms all throughout the world. This foreign exchange market is also known as Forex, FX, or even the money market. The members occupied with this market can purchase, sell, trade, and gamble on the monetary standards.

These foreign exchange markets are comprising of banks, forex sellers, business organizations, national banks, investment administration firms, hedge mutual funds, retail forex vendors, and financial backers.

There are five types of foreign exchange included:

  • Spot Markets

It’s the fastest transaction of currency occurs. This foreign exchange market gives quick payment to the purchasers and the dealers according to the current exchange rate. The spot market represents for nearly 1/3 to all the money trade, and exchanges which generally require a couple of days to settle the exchanges.

  • Forward Markets

In this market, there are two parties which can be either two organizations, two people, or government nodal offices. In this sort of market, there is a consent to do an exchange sometime not too far off, at a defined cost and amount.

  • Future Markets

The future business sectors accompany solutions for various issues that are being experienced in the forward market. Future business sectors work on comparative lines and fundamental way of thinking as the forward market.

  • Option Markets

An option market is an agreement that permits a financial backer to purchase or sell an instrument that is fundamental like a security, ETF, or even index at a determined amount throughout a certain period of time. Purchasing and selling 'choices' are done in this kind of market.

  • Swaps Markets

A Swap is a kind of subordinate agreement through which two parties trade the incomes or the liabilities from two unique monetary instruments. Most trades include these incomes flows dependent on a key amount.

Market overview

The worldwide foreign exchange market is primarily driven by the convergence of different variables, including fast urbanisation, changing way of life patterns and expanding income levels of people. Moreover, a huge ascent in worldwide the travel industry has positively affected the interest for foreign exchange. This is additionally upheld by the various advantages of forex, including high liquidity and transactional transparency, insignificant exchanging costs, 24x7 exchanging opportunities, and immense exchanging volume. The forex market likewise draws in worldwide merchants by offering different Profitable opportunities and early benefits. Additionally, quick digitization and technology headways are likely to add in a market growth.

Economic growth

The Global Foreign Exchange Market size was $6.60 million in 2020, and is expected to reach $10.2 trillion by 2026, at a growing CAGR of more than 7%.

Market segmentation: Analysis

The Global Foreign Exchange Market is segmented into product type, application/ End-user, and geographic region.

On the basis of product type- Currency Swaps, Outright Forward and FX Swap, and FX options.

In this, currency Swap hold the leading market share, which helps to drive the growth of the foreign exchange market.

On the basis of Application- Reporting Dealers, other Financial Institutions, and Non- financial Customers.

Among of all the Application, reporting dealers account help majority of the overall market share.

On the basis of geographic Region- North America, United States, Canada, Europe, and Germany.

In this, North America displays a clear supremacy in the market.

Some major key players in the Foreign Exchange Market are:

  • JPMorgan Chase
  • Citibank
  • Deutsche Bank
  • Bank of America Merrill Lynch
  • Royal Bank of Scotland

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