Foreign Exchange (forex or FX) is the trading of one currency for another. For example, one can swap the U.S. dollar for the euro.
What is foreign currency in simple words?
The currency of any foreign country which is authorized medium of circulation and the basis for record keeping in that country. Foreign currency is traded by banks either by the actual handling of currency or checks, or by establishing balances in foreign currency with banks in those countries.
What is foreign currency transaction explain with an example?
Foreign exchange transaction is a type of currency transaction that involves two countries. Generally, a foreign exchange transaction involves conversion of currency of one country with that of another. … An example of a foreign exchange transaction is where a person buys dollars and sells pounds.
What is foreign currency why it is used explain?
The foreign currency or foreign exchange market is a decentralized worldwide market in which currencies are traded. It was created in order to facilitate the flow of money derived from international trade. … A bank’s markets division, also known as its Treasury, is part of its wholesale banking business.
How is foreign currency determined Class 12?
Ans. Foreign exchange rate is determined by the market forces of demand and supply in foreign exchange market. The point where demand and supply of foreign exchange meet, gives the equilibrium rate of exchange as shown in figure and quantity of foreign exchange.
What is foreign currency accounting?
Foreign exchange accounting or FX accounting consists in reporting, in a company’s presentation currency, all assets, liabilities, revenues, expenses, gains and losses that are denominated in foreign currencies.
What is foreign transaction?
Foreign Transaction means the use of your Card or Account (other than through a Cash Advance) for a transaction with a business or entity located outside of the United States or for a transaction in a currency other than U.S. dollars.
What is the difference between foreign currency transaction and translation?
Transaction exposure impacts a forex transaction’s cash flow whereas translation exposure has an impact on the valuation of assets, liabilities, etc shown in the balance sheet. Resulting in different positions on cash flows and balance sheets. … Comparing transaction exposure vs.
What is the process of foreign currency translation?
Foreign currency translation is the restatement, in the currency in which a company presents its financial statements, of all assets, liabilities, revenues, expenses, gains and losses that are denominated in foreign currencies. The process of foreign currency translation results in accounting FX gains and losses.
What are the 4 types of money?
The 4 different types of money as classified by the economists are commercial money, fiduciary money, fiat money, commodity money. Money whose value comes from a commodity of which it is made is known as commodity money.
What is the currency of India called?
The Indian currency is called the Indian Rupee (INR). One Rupee consists of 100 Paise. The symbol of the Indian Rupee is ₹. The design resembles both the Devanagari letter “₹” (ra) and the Latin capital letter “R”, with a double horizontal line at the top.
What is Japan currency?
What is meant by foreign exchange? Answer: Currency is the medium of exchange in a country. The Indian currency is called the Indian Rupee. In a country, the foreign currency is called foreign exchange.
What is an example of a spot market?
Examples of the spot market
Examples of spot markets are commodity markets, stocks, and currency markets. Commodity markets transact various agricultural and mining products such as palm oil, coffee, tea, seeds, gold, oil, and natural gas. To be traded on the spot market, they must meet specific standards.
What is meant by foreign exchange rate Class 12?
The rate at which one currency is exchanged for another is called Foreign Exchange Rate. In other words, the foreign exchange rate is the price of one currency stated in terms of another currency. For example, if one U.S dollar exchanges for 60 Indian rupees, then the rate of exchange is 1$ = Rs.