nowjeon906 OP t1_ixyp18w wrote
Reply to comment by agate_ in ELI5: Who actually adjusts a currency exchange rate using global supply and demand data? by nowjeon906
>I can do a deal with that last guy. I buy up his dollars, and now the low offer is 140. If I want more I’ll have to pay 140 for them. The new price is 140.
How does this kind of price-changing happens in reality? I suppose it is all instantaneous, so... Does each organization have their own software that automatically gathers data regarding current global prices (including the most generous offer across the network) and sets 139, 140, 141... accordingly as their offer price at that point in time?
Taira_Mai t1_ixz76rz wrote
A lot of the trading is done electronically or is computer aided.
The currency markets operate like the stock market - foreign exchange markets (and currency futures are traded via computer.
willtantan t1_ixyuost wrote
I am no expert. Below is just one hypothetical scenario. Let's say you go to a currency exchange stand to buy Euro. Euro price will be set by currency exchange stand, this price will include cost of currency stand business plus FX rates from their broker. Their brokers are probably some local small banks. Small banks will trade with larger banks like Citibank. Larger banks will trade with each other to set the FX rates. Governments will also participate in interbank market to influence FX rates. So FX rates are ultimately set up by interbank market.
[deleted] t1_ixzo8b6 wrote
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