The Main Actors International travelers know first hand the importance of exchange rates, because they exchange one national currency for another. Yet in spite of the significance of international travel, this constitutes a minor component of the volume of international currencies traded daily. Banks are the main participants in the market acting either for their clients or their own portfolio. Inter-bank transactions account for about 70 percent of the foreign exchange market. When the banks cannot rearrange their portfolios by themselves or they wish to remain anonymous, they employ the services of brokers who act as middlemen.
Brokers receive commissions for bringing buyers and sellers together.
They bear no risk. Multinational corporations constantly need various currencies for their operations and to hedge against foreign exchange risk. Political events affect the exchange rates, and exchange rates affect the profitability of subsidies and affiliates that operate in various national and international markets. Therefore, in order to avoid translation losses, multinationals sometimes engage in swaps, a spot sale of a currency with a forward repurchase of the same currency. Speculators and official agencies, mainly central banks, also play a role in the foreign exchange market.