Foreign exchange, also known as forex, involves exchanging one country's currency for another. This exchange serves various purposes. In international trade and business, payments are often made in different currencies for buyers and sellers, making foreign exchange crucial for smooth trade operations.

Some people engage in forex to speculate, purchasing currencies in hopes of their value increasing relative to others, leading to a profit. This approach can also provide a competitive advantage, as seen in trading derivatives. Currency traders, for instance, use derivatives based on exchange rates to determine the preferred currency for trading.

In summary, forex plays a vital role in facilitating international trade and offers opportunities for speculators and currency traders to gain a competitive edge in the market.