What do you understand by foreign exchange?

What is the meaning of foreign exchange explain with example?

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. … The forex market is the largest, most liquid market in the world, with trillions of dollars changing hands every day.

What do you understand by foreign exchange management?

Foreign exchange management is the process of limiting a company’s exposure to foreign currency fluctuations. In most cases, this is done by companies that engage in foreign trade.

What is foreign exchange and why is it important?

Foreign exchange is the trading of different national currencies or units of account. It is important because the exchange rate, the price of one currency in terms of another, helps to determine a nation’s economic health and hence the well-being of all the people residing in it.

What do you mean by foreign exchange Class 12?

Foreign exchange refers to all the currencies of the rest of the world other than the domestic currency of the country. For example, in India, US dollar is the foreign exchange.

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What do you understand by foreign exchange management Act 2000 explain its objectives?

The main objective behind the Foreign Exchange Management Act (1999) is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments. It was also formulated to promote the orderly development and maintenance of foreign exchange market in India.

What is the definition of foreign exchange under Foreign Exchange Management Act 1999?

o the taking out of India to a place outside India any goods, o provision of services from India to any person outside India; • “foreign currency” means any currency other than Indian currency; • “foreign exchange” means foreign currency and includes,- o deposits, credits and balances payable in any foreign currency.

Why is foreign exchange used?

Market participants use forex to hedge against international currency and interest rate risk, to speculate on geopolitical events, and to diversify portfolios, among several other reasons. … Global corporations use forex markets to hedge currency risk from foreign transactions.