Currencies are the standards of payment of different countries and are related to one another via the official exchange rate. For example, Rupee is the Indian currency, Dollar is the US currency, and Pound is UK’s currency while the Yen is the currency of Japan. The European Union has a common currency called the Euro. Normally, the dollar, Yen, Pound and Euro are referred to as hard currencies. Let us understand why to trade currencies!

Traders and businessmen have different reasons to trade currencies. For example, an importer who has to pay in dollars will want to protect against a stronger dollar. An exporter who has dollar receivables will need to protect against a weakening dollar. Similarly, borrowers who have to repay dollar loans need to protect against a stronger dollar. Then there are currency traders who are purely looking at opportunities in the market to trade various currencies.