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Foreign Exchange & Foreign Currency Explained A to Z

Foreign Exchange & Foreign Currency – In the present age of modern and globalization, trade and commerce, and human life are not confined within a country. Due to the expansion of international trade, technological development, change in human needs, trade relations with one country to another, the prevalence of financial transactions in various fields, education, medicine, travel, etc. foreign exchange and foreign exchange transactions have actually gained a lot of breadth and breadth.

Because it is not legally possible to carry the currency of one country to another country and use it in another country. Therefore, in performing any type of financial transaction with another country, it is necessary to convert the currency of one’s own country into the currency of another country legally.

In this case, some currencies such as the dollar, pound, euro, etc. have been internationally recognized for the settlement of foreign debts and some methods of remittance abroad such as:

ATM cards, cash certificates, international money orders, foreign exchange bills, bank drafts, telegraphic transfers, etc. . Determining the exchange rate of a foreign currency or the exchange rate of one country’s currency with another is also an essential factor in settling transactions.

Of course, at one time the government used to fix the exchange rate of the currencies of the two countries with the currencies of their own countries but now with the introduction of floating currency system in almost all the countries, the exchange rate of the currencies of the two countries is determined according to demand and supply.

Foreign Exchange & Foreign Currency

Concepts of Foreign Exchange:

Conversion of one country’s currency to another country’s currency and transfer is called foreign exchange. Foreign exchange is not required for settling transactions within one’s own country. Because the conventional currency of one’s own country is easily exchangeable within the country.

Foreign exchange is created because the currency of one country is obsolete or cannot be legally transferred to another country. However, foreign transactions have to be settled by exchanging the currency of the two countries, i.e. by converting the currency of one country into the currency of another.

Therefore, it can be said that the conversion of one country’s currency into the value of another country’s currency and the strategy of debt settlement is called foreign exchange. Foreign exchange basically means the exchange of foreign currency. And foreign currency means the currency of a country other than one’s own.

According to Evitt, “foreign exchange is the means and methods by which rights to wealth expressed in terms of the currency of one country are converted into rights into wealth in terms of the currency of another country.” Or the use of a strategy to determine the exchange rate of one country’s currency with another’s currency and to assess the assets of both countries is called foreign exchange. Foreign exchange can be said in the context of the above definition and discussion – Concept of foreign exchange:

Foreign exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country and thereby, involves the international transfer of money.

Foreign exchange is the subject of discussion in foreign exchange.

  • Determining the exchange rate of foreign exchange is one of the considerations in foreign exchange. Buying and selling of foreign currency are subject to foreign exchange.
  • The process of transferring money abroad involves foreign exchange.
  • This is the process of settling international transactions.
  • In conclusion, foreign exchange refers to the process of determining the exchange rate, buying and selling of foreign currency.
  • in the foreign exchange market, remittances between two countries, etc,
  • in addition to converting the currency of one country into the currency of another.


Concept of Foreign Exchange Rate:

The concept of Foreign Exchange Rate refers to the exchange rate of one country’s currency with another country’s currency. International transactions are debts – debts are settled in foreign currency because it is not possible to settle with the conventional currency of one’s own country. Determining the exchange rate of the currencies of these two countries also became essential.

Usually, the exchange rate refers to the shared printer. In the Bashak sense, the exchange rate is the rate at which the currency of one country is denominated in the currency of another country. The goal of foreign exchange is to make buying and selling currency easier.

H.E Evitt said, “The rate of exchange is the price of one currency in terms of another.”

According to Brigham and Houston, “The number of units of a given currency that can be purchased for me is the unit of mother currency.”

Final word about Foreign Exchange & Foreign Currency:

In this article of proper definition and discussion, it can be said about the foreign exchange rate:

The exchange rate is the relationship between the exchange rates of the currencies of two countries. Once the exchange rate is fixed, the currency of one’s own country can be easily converted into the currency of another country.

The exchange rate is considered in the settlement of transactions in international trade and in the need to transfer money abroad. In conclusion, the ratio of the amount of foreign currency bought and sold in the currency market to the local currency is called the exchange rate.

In fact, the exchange rate is the value of the local currency for the currency of another count.

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