Trades in foreign exchange market are a result of the following:

1. imports and exports of goods and services, for which the foreign exchange transaction takes place almost simultaneously with the exchange of goods / services

2. investments and repatriation of profits and investments

3. private transfers by citizens of a country working in another country and sending money to their families back home (pls note that this is not import or export of services)

4. govt or multi-lateral transfers, e.g., aid by a rich nation to poor nation, etc.

5. speculation by foreign exchange traders

6. hedging activities by exporters adn importers, which they understake to protect themselves from foreign exchange risk