K. Alec Chrystal guides the reader through the complexities of foreign exchange markets. Chrystal first describes how currencies are traded, pointing out the key differences between the retail markets and the wholesale or interbank markets for “spot” foreign exchange. He then discusses how the existence of forward currency markets enables importers and exporters to avoid exchange rate risk. The author then considers the newly emergent futures and options markets in foreign exchange and analyzes options as a method of hedging. The importance of various kinds of arbitrage and speculation in providing an efficient and liquid foreign exchange market is also outlined. Finally, the author discusses the special role of the dollar as the money of the foreign exchange markets.