how does market of currency work?

Question

is the market of currency like NYSE? if people exchange their dollars in their account for other foreign money, will the value of dollars change?

Answer 1

In the United States, there are two layers to the question, the real FOREX market and the "pretend," FOREX market that little traders play in.

The real FOREX market does largely work like the NASDAQ rather than the NYSE. Banks literally phone one another to trade money. The exchange is largely electronic. However, outside the United States, the only participant in the global FOREX market may be a central bank or central government. In that case, where there are capital controls, the price of currency is fixed. On top of this are the airport currency and bank currency exchanges.

The "pretend" market is what many little FOREX traders actually participate in. Because it is a dealers' market, dealers can set up any price they like as long as they are not too far from the market. This permits them to rig the game so their customers lose to the house, to use a gambling term on a consistent basis. Because the spot market is not subject to regulation, other than ordinary common law, there really are no legal boundaries as to what a dealer can do that are meaningful. You cannot get cheated in that market any more than you can get cheated with a roulette wheel. It is a rigged game, except the dealer can actually choose the optimal moment to cheat the client.

Yes, the value of dollars change.

Answer 2

The trading in currency on the FOREX exchange the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex markets currently exceeds US$ 2–2.5 trillion a day.
http://en.wikipedia.org/wiki/Foreign_exchange_market
People (financial institutions) exchanging dollars for other currencies could lower the value of the dollar until others seeing the lower value decide that that dollars is the currency to hold because it is undervalued. Individual do not have much effect because of the size of the market.