The foreign exchange market: how currency prices are set

In the first half of 2025, the dollar posted its worst half-year since 1973: down 10.8% against a basket of major currencies. Over the very same months, it had never been more present in global trading, appearing on 89.2% of all transactions. A currency can therefore lose value and tighten its grip at the same time. That paradox is the doorway into the largest, most liquid and least understood market on the planet: the foreign exchange market.

The world's biggest market has no building and no opening bell

On an average day in April 2025, the equivalent of $9.6 trillion changed hands on the foreign exchange market, according to the triennial survey of the Bank for International Settlements. That figure dwarfs the daily activity of every stock exchange on earth combined. In three years, volume jumped 28%, reaching its highest level since records began in 1986.

Yet this market has no address. There is no central currency exchange, no building, no opening bell. Currencies trade over the counter, directly between banks, brokers and electronic platforms, 24 hours a day, from the Sydney open to the New York close. When one hub shuts, another takes over. The currency market never sleeps.

This design explains why the market stays invisible to the public even though it sets the price of almost everything: imported coffee, a trip abroad, a smartphone assembled across three continents, a government's debt. To understand how a currency's price is formed is to understand a central gear of the world economy.