How Do You Buy Currency Online?


Quick Answer

Depending on your needs, foreign currency is purchased online either through large financial institutions or through brokers. Currency purchased from financial institutions is usually delivered as cash and used in travel situations. Currency purchased through a broker is generally used as an investment, either to speculate on changing exchange rates or as a hedge held to balance the risk of other investments.

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Full Answer

Many large banks and credit unions offer foreign currency purchases to customers online with a small fee. The price of the currency is based on the current exchange rate between the currency being bought and the currency used to purchase it. This rate can change at any time, depending on economic conditions, trading activity on currency markets and the actions of central banks in both countries.

The currency market that allows for the purchase of foreign currency is known as the Forex exchange. This market works much the same as a stock market, with both buying and sell of currency. A transaction on the currency exchange requires that you pair up currencies, offering one currency for another. The price of a foreign currency depends on the demand for that currency, with stronger currencies costing more. Because of this, few currency transactions are made on a one-to-one basis.

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