Generally speaking, the selling price of the bank is actually your buying price, and the buying price of the bank is your selling price. But the selling price of the bank must be higher than the buying price. For example, if you go to the bank to buy foreign currency, the bank will have a corresponding selling price, which is the price you need to accept. If the bank converts foreign currency into local currency, the bank's purchase price applies. The difference between the buying price and the selling price is actually the income that the bank can obtain.
Foreign currency refers to the currency other than "bookkeeping base currency", which is the bookkeeping base currency relative to the domestic currency, and is specifically manifested as the currency other than "bookkeeping base currency" in accounting.
include
Foreign accounts and securities
Foreign currency account in China
Foreign cash
If the official currency of a region is considered unstable or unreliable in the near future (such as high inflation or political instability), many people will try to use foreign currency as a means of storing value. Large and important economic units (such as foreign trade banks, central banks or governments) also store foreign currency. These foreign currencies can be used to reduce the value impact of currency depreciation, or to promote or simplify international trade, and so on. The government also regards foreign exchange as a means of its economic policy. Some people also use foreign currency to take speculative risks in order to gain profits from exchange rate fluctuations.
There are certain risks in storing foreign currency. If a currency circulates abroad, its circulation rate will decrease, and the quantity in its official circulation area will also decrease. In this case, its official central bank will be forced to increase the number, which will lead to the devaluation of the currency under certain conditions. For example, in 2002, the dollar depreciated 15% against the euro in a short time, which led to the depreciation of the euro zone's dollar foreign exchange reserves.
Exchange range
Different currencies have different exchange ranges.
A freely convertible foreign currency can be freely converted into other currencies without restriction.
Limited convertible foreign currencies can only be exchanged under certain conditions, such as only a certain number of people can exchange them, or the amount of exchange is limited.
Non-convertible foreign currencies are not allowed to be converted into other currencies, or can only be converted into other currencies through special permission.
Foreign currency transaction
The foreign exchange trading market is the largest international trading market in the world. This market is also the institution that determines the exchange rate between various currencies. The most important trade points are new york, Tokyo, Hongkong, Frankfurt and London. The most important foreign currencies are dollars, euros, yen, pounds and Swiss francs.