On FOREX markets buying and selling currency is made on a speculative basis by most traders. It is the same like stock market, when traders buy (stocks) currencies holding to get stronger and sell when will get weaker. Most of this trading is doing by investment companies, hedge fund, banks and brokerages. In last couple years the currency trading became open for individual investor with small financial steak. Companies use the currency market for purchasing some amount of foreign currency for there obligations and commitments with other international companies.
The short retrospective for foreign exchange market life will be:
Currency markets were relatively quite until World War 1. Speculation ever made was unknown and was with negative sentiment by institutions. After war ending foreign exchange markets became volatile and shows the first signs of speculative activity, but any further changes and progress was interrupt with great depression. The forex markets were quiet and stable during World War II, when the market started with many important changes and improvements.
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