Usually the consumers apply to currency exchange because of traveling. Travelers often need to convert one currency into another to be able to cover their expenditures abroad. When buying goods abroad or through the Internet with a credit card, consumers will discover that the price they paid in the foreign currency is converted to their domestic currency. Such exchange is a comparatively small operation, but the total number of all such transactions is considerable.
Companies need to exchange currency when they make business outside their country. For instance, if the payments they receive for goods exported to another country are in that country’s currency, then the money must be converted back to the domestic currency. Likewise, if they import goods or services, then companies will have to pay in a foreign currency. They will get it by converting their domestic currency into the foreign one. Large corporations convert large quantities of currency every year; for instance, a company like General Electric (GE) converts tens of billions of dollars annually. The determination of the right time to convert can influence greatly on their profits.
Investors and stock-market speculators need to exchange currency always when they trade or make any foreign investment in ordinary shares, bonds, bank deposits, or real estate. For instance, when a Swedish investor purchases stocks in Sun Microsystems on the NASDAQ, he will have to pay for them in U.S. Dollars and then convert Swedish Krona to U.S. Dollars. Likewise, a Japanese real estate investor who trades a New York property wants to convert the gain of the sale in U.S. Dollars to Japanese Yen.
 Speculators and investors also sell and buy currencies straight in order to gain from alterations in the currency exchange markets. For example, if an American investor Thinks that the Japanese economy is growing and anticipates the Japanese Yen to increase in value, then he may want to buy it and take a long position because he thinks that in the near future he will sell it and gain profits. Likewise, if an American investor thinks that the Euro will soon depreciate, then she may want to sell it to take a short position. It’s interesting that investors and speculators can gain equally from currencies that become stronger (by taking a long position) or from currencies that become weaker (by taking a short position). Speculators are often day traders, they try to gain from market movements in very short periods of time; purchasing a currency and then selling it again can be performed within a couple hours or even minutes.
The reasons that attract speculators to trade currencies:
- the size and daily inconstancy of the market, which gives them incomparable enthusiasm,
- the nearly full liquidity of the currency exchange market,
- the 24 hour availability of the market,
- no brokerage charges for the currency trading.
Commercial and Investment Banks offer their deposit and lending clients the service of currency trading. These also usually operate in the currency market for hedging transactions and proprietary trading purposes.
Governments and central banks trade currencies to make their trading conditions better or in order to adjust economic or financial imbalances. But because they are non-profit organizations, the governments and central banks do not have the right to speculate, however frequently their activity is profitable as they generally trade on a long-term basis. | 
