What is one of the roles of the foreign exchange market?

The foreign exchange market plays a crucial role in facilitating international trade and investment. This is because it provides a platform for buyers and sellers to exchange different currencies, which is essential for businesses engaged in cross-border transactions. When companies import or export goods and services, they often need to convert their local currency into the currency of their trading partner, and the foreign exchange market provides the necessary liquidity and rates for these transactions to occur.

Additionally, the foreign exchange market enables investors to diversify their portfolios by allowing them to invest in foreign assets and currencies. This supports global economic growth and integration, as it encourages the flow of capital across borders and helps businesses and investors manage currency exposure related to international activities.

In contrast, the other options mistakenly suggest that the function of the foreign exchange market is to equalize currency values, eliminate currency risk completely, or restrict transactions to central banks only, which are not aligned with the primary functions and operations of the market.