Final answer:
Firms that buy and sell internationally need to exchange currencies to pay their workers and suppliers. This is done in the foreign exchange market.
Step-by-step explanation:
Firms that buy and sell on international markets find that their costs for workers, suppliers, and investors are measured in the currency of the nation where their production occurs, but their revenues from sales are measured in the currency of the different nation where their sales happened.
This creates a need for currency exchange. For example, a Chinese firm exporting abroad will earn U.S. dollars, but will need Chinese yuan to pay their workers, suppliers, and investors in China.
The market where people or firms use one currency to purchase another currency is called the foreign exchange market. In this market, the Chinese firm would be a supplier of U.S. dollars and a demander of Chinese yuan.