1. There is no limit for individuals to hold US dollars, but there are restrictions on foreign exchange settlement.

according to article 2 of the detailed rules for the implementation of the measures for the administration of individual foreign exchange, the annual total amount management shall be implemented for individual foreign exchange settlement and domestic individual foreign exchange purchase. The annual total is equivalent to $5, per person per year. The State Administration of Foreign Exchange may adjust the annual total according to the balance of payments.

2. Differences:

1. Different definitions

Foreign exchange transactions are the exchange of one country's currency with another.

The purchase of foreign exchange means that in China, our functional currency is RMB, and when we need to pay foreign currency after a foreign currency transaction, we use RMB to purchase and exchange it for foreign currency payment.

2. Different ways

Foreign exchange trading is different from other financial markets. There is no specific place or central exchange in the foreign exchange market, but transactions are conducted through electronic networks among banks, enterprises and individuals.

foreign exchange purchase is a transfer transaction, which is to exchange the local currency in your account for foreign currency, which is equivalent to foreign exchange trading. The converted foreign currency is still in your account or bank card, and no cash is withdrawn.

Extended information:

The foreign exchange market exists because:

1. Trade and investment

Importers and exporters pay one currency when importing goods, and charge another currency when exporting goods. This means that they receive and pay in different currencies when they settle their accounts. Therefore, they need to convert some of the money they receive into money that can be used to buy goods.

Similarly, a company that buys foreign assets must pay in the currency of the country concerned, so it needs to convert its own currency into the currency of the country concerned.

2. Speculation

The exchange rate between two currencies will change with the change of supply and demand between the two currencies. A trader can make a profit by buying a currency at one exchange rate and selling it at another more favorable exchange rate. Speculation accounts for the vast majority of transactions in the foreign exchange market.

3. Hedging

Due to the fluctuation of exchange rate between two related currencies, companies with foreign assets (such as factories) may suffer some risks when converting these assets into local currency. When the value of foreign assets denominated in foreign currency remains unchanged for a period of time, if the exchange rate changes and the value of this asset is converted into domestic currency, gains and losses will occur.

companies can eliminate this potential profit and loss through hedging. This is the execution of a foreign exchange transaction, and the transaction result just offsets the gains and losses of foreign currency assets caused by exchange rate changes.

Reference: Baidu Encyclopedia-Foreign Exchange Trading

Reference: Baidu Encyclopedia-Purchase of Foreign Exchange

Reference: Baidu Encyclopedia-Detailed Rules for the Implementation of Individual Foreign Exchange Management Measures.