What are foreign exchange markets?

Foreign exchange markets are primarily decentralized markets specifically designed for the trading of currencies from around the world. This system allows individuals, businesses, and institutions to exchange one currency for another, facilitating international trade and investments. The unique characteristic of these markets is that they operate 24 hours a day, enabling continuous trading across different time zones, which is vital in a globalized economy.

The functioning of these markets is crucial for setting the exchange rates between different currencies, which can fluctuate based on a variety of factors such as economic indicators, political stability, and market sentiment. This decentralization means that trading does not occur in a centralized exchange, but rather through a global network of banks, brokers, and financial institutions.

The other options, while they may refer to legitimate markets, do not accurately define foreign exchange markets. The trading of commodities, corporate bonds, or stocks is not related to currency trading and thus does not capture the nature of what foreign exchange markets are.