Now that you know the overall structure of the foreign exchange market, let’s dig a little deeper and find out who are those standing on the ladder. It is important to understand the nature of the spot foreign exchange market and know who the real players are.
Until the late 1990s, only “big players” could participate in this foreign exchange market trading game. The initial requirement is that you can only conduct foreign exchange transactions when you have 10 million to 15 million US dollars of funds. It is used for the purpose of bankers or large institutions, not our group of small retail investors. However, with the rise of the Internet, online foreign exchange trading companies now have the ability to provide trading accounts for those of us.
 
The following is a list of major players in the foreign exchange market:
 

  1. Super Bank
    In view of the fragmentation of the foreign exchange spot market, it is the largest banks in the world that determine the exchange rate. Based on the supply and demand relationship of currencies, these large banks “set” the bid / ask spreads that we like or hate. (These large banks are what we usually call market makers)
    These large banks are collectively referred to as the inter-bank foreign exchange market. These banks provide large-scale foreign exchange transactions for their customers and themselves every day. Some super banks include: UBS, Barclays Bank, Deutsche Bank and Citibank. You can say that the inter-bank market is a foreign exchange market.
    Who are the participants in the foreign exchange market-Yuhui International
     
  2. Large commercial company
    The company’s entry into the foreign exchange market is to conduct business. Therefore, Apple must first convert US dollars into Japanese yen to import electronic equipment from Japan. Because the scale of foreign exchange transactions by large commercial companies is much smaller than that of the interbank market, this type of market participant usually conducts foreign exchange transactions with commercial banks.
    Mergers and acquisitions between large companies can also cause exchange rate fluctuations in the foreign exchange market. In international cross-border mergers and acquisitions, large-scale currency exchanges will be involved, which may cause exchange rate fluctuations.
     
  3. Governments and central banks 
    Governments and central banks around the world, such as the European Central Bank, the Bank of England and the Federal Reserve, also regularly participate in the foreign exchange market. Like enterprises, government agencies at the national level also participate in the foreign exchange market. Their purpose is to conduct international trade settlement, manage their foreign exchange reserves, and other operations.
     
    At the same time, when the central bank adjusts interest rates to combat inflation, this behavior of the central bank will also lead to fluctuations in the exchange rate of the foreign exchange market. The central bank can influence the currency value of money by means of interest rates. When the central bank intervenes in foreign exchange markets, the foreign exchange market may even fluctuate sharply. This intervention may be direct intervention or indirect intervention. Sometimes, the central bank believes that its currency price is overvalued and undervalued, and they will conduct sell / buy operations on the foreign exchange market to change the exchange rate trend.
     
  4. Speculators (including you at the moment) 
    “Participation is to make money!” 
    This is probably the voice of speculators. The scale of speculative foreign exchange transactions accounts for 90% of the total scale of foreign exchange transactions. These speculators have various types and sizes. Some speculators are full of pockets, and some are shy, but their purpose in participating in the foreign exchange market is the same-to make money.