Foreign exchange transaction is the exchange of one country's currency with another. Different from other financial markets, the foreign exchange market has no specific location and no central exchange, but transactions between banks, enterprises and individuals through electronic networks. "Foreign exchange trading" means buying one of a pair of currencies at the same time and selling the other. Foreign exchange is traded in the form of currency pairs, such as euro/dollar or dollar? /JPY (USD/JPY).

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From the nature and types of transactions, foreign exchange transactions can be divided into the following two categories:

1. Basic foreign exchange transactions to meet customers' real trade and capital trading needs;

2. On the basis of basic foreign exchange transactions, foreign exchange derivatives transactions are conducted to avoid and prevent exchange rate risks or for foreign exchange investment and speculative needs.

The basic foreign exchange transactions belonging to the first category are mainly spot foreign exchange transactions, while foreign exchange derivatives transactions include forward foreign exchange transactions, foreign exchange selective transactions, swap transactions, swap transactions and so on.

There are two main reasons for foreign exchange transactions. About 5% of daily transaction turnover is due to companies and government departments buying or selling their products and services abroad, or having to convert the profits they earn abroad into their own currencies. The other 95% transactions are for profit or speculation.