Foreign exchange is currency and money claims. The examples of foreign exchange are banks deposit and bank bills. The term foreign exchange is also referred to as transactions including the conversion of currency from one country to another or for the international transmission of monetary 소액결제현금화 policy instruments and loans.
The money of a country cannot be used for any payments in any other countries. Through travel, trade and transactions among individuals and companies from different countries, it is necessary to convert the money into the currency of many other countries to pay for any services and goods in these countries. The transfers of money values from one country to other countries are determined by the price at which it is the currency of a country by another. It is one main problem of the foreign exchange, because the prices of the currency can change any time.
Its main purpose is to simplify trades, investments, and allowing companies to convert one currency into another currency. For example, it allows U.S. companies to import goods from Britain in pound sterling, although the company’s turnover is in U.S. dollars. It is also compatible with the speculation, and provides for exchange transactions, in which the investors borrow the low-yielding currencies and invest the high yield currencies may lead to the loss of competitiveness in many countries.
In a typical transaction currency, a party buys a quantity of one currency for the payment of an amount in another currency. The modern exchange market began to emerge in the Organization of American States.