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comment by mk
mk  ·  2965 days ago  ·  link  ·    ·  parent  ·  post: Theories emerge for pound's 'flash crash' against dollar

Forex is the market. It's the biggest market in the world.

https://en.m.wikipedia.org/wiki/Foreign_exchange_market

The value of a currency is based mostly on its utility in trade, the stability of the state backing it, the supply of it, the collective belief that it has value, and speculation that any of these will change.

Ultimately, it is a social agreement about specific numbers and paper.





user-inactivated  ·  2965 days ago  ·  link  ·  

Oh. Ok. So people don't invest in money like stocks and bonds, they just try to make money converting one value to another. I guess that doesn't sound too bad.

mk  ·  2965 days ago  ·  link  ·  

That's right. But the truth is, there's very little difference in practice.

user-inactivated  ·  2965 days ago  ·  link  ·  

Is this speculation part of the reason why currencies can collapse completely? Or is that more about the governments behind the currencies?