abhishreshthaa
Abhijeet S
What is foreign exchange ?
In a business setting, there is a fundamental difference between making payment in the domestic market and making payment abroad.
In a domestic transaction, only one currency is used while in a foreign transaction, two or more currencies maybe used.
Suppose an U.S importer has agreed to purchase a certain quantity of Indian spices and to pay the Indian exporter Rs. 1000000 for it.
How would he go about doing this? He would have to pay the amount in dollars, which will be equivalent to its existing rate in rupees at a decided date.
That is why the foreign exchange market comes into existence so that such transactions become possible and easier.
The special checks and other instruments for making payment abroad are referred to collectively as foreign exchange.
In other words, Foreign exchange includes currencies and other instruments of payment denominated in currencies.
In a business setting, there is a fundamental difference between making payment in the domestic market and making payment abroad.
In a domestic transaction, only one currency is used while in a foreign transaction, two or more currencies maybe used.
Suppose an U.S importer has agreed to purchase a certain quantity of Indian spices and to pay the Indian exporter Rs. 1000000 for it.
How would he go about doing this? He would have to pay the amount in dollars, which will be equivalent to its existing rate in rupees at a decided date.
That is why the foreign exchange market comes into existence so that such transactions become possible and easier.
The special checks and other instruments for making payment abroad are referred to collectively as foreign exchange.
In other words, Foreign exchange includes currencies and other instruments of payment denominated in currencies.