The concept of foreign exchange has a double meaning, that is, there are dynamic and static points.

The dynamic concept of foreign exchange refers to a specialized business activity of converting one country's currency into another country's currency to pay off international creditor's rights and debts. It's short for foreign exchange.

The static concept of foreign exchange refers to the means of payment expressed in foreign currency that can be used for international settlement. According to the definition of the International Monetary Fund, "foreign exchange is the creditor's rights held by the monetary management authorities (central bank, monetary management institutions, foreign exchange stabilization fund and the Ministry of Finance) in the form of bank deposits, treasury bills of the Ministry of Finance and long short-term government bonds. Can be used when there is a deficit in the balance of payments. " According to the Regulations on Foreign Exchange Management revised and promulgated by China1June 1997, foreign exchange refers to the following means of payment and assets expressed in foreign currency that can be used for international settlement:

(1) Foreign currencies, including banknotes and coins;

(2) Foreign currency payment vouchers, including bills, bank deposit vouchers, corporate bonds, stocks, etc. ;

Foreign currency securities, including government bonds, corporate bonds and stocks;

(4) Special drawing rights only, European currency units;

(5) Other foreign exchange assets.

What people usually call foreign exchange is generally in its static sense.

Second, the classification of foreign exchange

There are many classifications of foreign exchange, which can be divided into free foreign exchange and bookkeeping foreign exchange according to whether it is freely convertible or not; According to its source and use, it can be divided into trade foreign exchange and non-trade foreign exchange; According to the delivery period of the transaction, it can be divided into spot foreign exchange and forward foreign exchange. In China's foreign exchange banking business, it is often necessary to distinguish between foreign exchange cash and cash. Foreign currency cash refers to foreign banknotes and coins. Foreign currency cash is mainly brought in from abroad.

Foreign currency cash refers to the free foreign exchange in the local bank deposit account of the currency issuing country. The so-called free foreign exchange refers to foreign exchange that can be freely bought and sold in the international financial market, widely used in international settlement, tasted and paid internationally, and freely converted into other countries' currencies. Foreign exchange cash is mainly remitted from abroad, or foreign currency bills brought or sent from abroad are collected by banks and deposited after receipt.

Under normal circumstances, the subject matter of various foreign exchange can only be actually settled internationally, that is, cash exchange, after being converted into deposit currency in the deposit account of the local bank in the currency issuing country. All foreign paper money is not necessarily foreign exchange. Whether foreign paper money is called foreign exchange depends first on whether it can be freely exchanged, or whether it can be returned to other countries and deposited into the general accounts of commercial banks in that country without restrictions. You can call it foreign exchange at will when you need it.

Third, the role of foreign exchange.

(1) Promoting the development of international economy and trade. Paying off international creditor's rights and debts with foreign exchange can not only save the cost of transporting cash, reduce risks, shorten payment time and speed up capital turnover, but more importantly, it can expand international credit exchanges, broaden financing channels and promote the development of international economy and trade.

(2) Adjust the surplus and deficiency of international funds. The unbalanced development of the world economy leads to the unbalanced distribution of funds. Some countries have a relative surplus of funds, while others have a serious shortage of funds, so it is objectively necessary to adjust the surplus and deficiency of funds. As a means of international payment, foreign exchange can adjust the surplus and deficiency of funds through international credit and investment, and promote the balanced development of national economies.

(3) Foreign exchange is an important part of a country's international reserves and the main means of payment to pay off international debts. As a national reserve asset, it can be used to pay off debts when the balance of payments is in deficit, just like the national gold reserve.

Fourth, the concept of exchange rate

Exchange rate is the ratio of one country's currency to another's currency. If foreign currency is regarded as a commodity, then the exchange rate is the price of buying and selling foreign exchange, that is, the price of one currency against another, so it is also called the exchange rate.

Verb (abbreviation of verb) exchange rate pricing method

To determine the exchange rate between two different currencies, we must first determine which country's currency shall prevail. Due to different standards, several different exchange rate pricing methods have emerged.

Direct quotation. Also known as the price payable method. It is based on a certain unit of foreign currency as the standard, converted into the national currency to express its exchange rate. Under the direct quotation, the amount of foreign currency is fixed, and the fluctuation of exchange rate is expressed by the change of the relative amount of local currency. The decrease in the local currency converted from a certain unit of foreign currency indicates that the exchange rate of foreign currency has decreased, that is, the depreciation of foreign currency or the appreciation of local currency. China and most countries in the world use direct speech. China's RMB exchange rate is a single and managed floating exchange rate system based on market supply and demand. The People's Bank of China announces the exchange rate of RMB against major foreign currencies according to the prices formed in the inter-bank foreign exchange market.

Indirect pricing method. Also known as accounts receivable pricing method. It is based on a unit's domestic currency and converted into a certain amount of foreign currency to express its exchange rate. Under the indirect pricing method, the amount of domestic currency is fixed, and the fluctuation of exchange rate is expressed by the change of relative foreign currency. The increase in the number of domestic currency converted into foreign currency in a certain unit indicates that the exchange rate of domestic currency has risen, that is, the appreciation of local currency or the depreciation of foreign currency. On the contrary, the amount of a certain unit of domestic currency converted into foreign currency decreases, indicating that the exchange rate of domestic currency has declined, that is, the depreciation of local currency or the appreciation of foreign currency. Britain has always adopted indirect pricing method.

The meanings of direct quotation method and indirect pricing method are completely opposite to exchange rate fluctuation, so when quoting the exchange rate of a certain currency and explaining its exchange rate fluctuation, it is necessary to specify which pricing method to adopt to avoid confusion.

Dollar pricing method, also known as new york pricing method, refers to the indirect pricing method for other foreign currencies in new york international financial market, except for the direct quotation for pound sterling. The dollar pricing method was implemented by the United States on September 1978 1, which is the prevailing pricing method in the international financial market.

Types of exchange rate of intransitive verbs

(a) From the perspective of determining exchange rates:

1, basic exchange rate. Usually, a freely convertible key currency, which is most commonly used in international economic transactions and accounts for the largest proportion of foreign exchange reserves, is chosen as the main target, and the exchange rate is determined by comparing it with the domestic currency. This exchange rate is the base exchange rate.

2. Cross exchange rate. After the basic exchange rate is worked out, the exchange rate of local currency against other foreign currencies can be calculated through the basic exchange rate. The exchange rate thus obtained is the cross exchange rate, also known as the arbitrage exchange rate.

(B) from the perspective of the exchange rate system:

1, fixed exchange rate. Fixed exchange rate means that a government chooses a basic reference through administrative or legal means, and determines, publishes and maintains the price comparison between its own currency and the reference unit. For reference, it can be gold (no longer used), a foreign currency or a group of currencies. When a government pegs its currency to a group of foreign currencies, the currency is said to be pegged to a basket of currencies. Under the fixed exchange rate system, the foreign exchange rate is basically fixed, and the fluctuation range of the exchange rate is limited to a very small range.

2. Floating exchange rate. Floating exchange rate refers to the exchange rate system that the exchange rate level is completely determined by the supply and demand of the foreign exchange market and is not interfered by the government.

(c) From the perspective of bank foreign exchange transactions:

1, buying exchange rate

Also known as the buying price, it is the price used by foreign exchange banks to buy foreign exchange from customers. Because its customers are mainly exporters, the selling price is usually called "import exchange rate".

2. Selling exchange rate

Also known as the selling price, it is the price that foreign exchange banks sell to customers. Because its customers are mainly importers, the selling price is usually called "import exchange rate".

The buying and selling price depends on the position of the buyer or seller in foreign exchange transactions. The difference between the bid price and the bid price is generally around 1%~5%, which is the fee income of foreign exchange banks.

3. Intermediate exchange rate

It is the average of buying price and selling price. Newspapers often use intermediate exchange rates when reporting exchange rate news.

(4) Notice of payment from the perspective of foreign exchange transactions:

1, telegraphic transfer rate.

T/T exchange rate is the exchange rate at which a bank informs its foreign branches or correspondent banks to pay the payee by telegram after selling foreign exchange. T/T is the fastest way of international exchange in international capital transfer. It can be paid within one or three days, and the bank can't use the customer's funds, so the exchange rate of wire transfer is the highest.

2. Remittance rate

Remittance exchange rate is the remittance method that the bank informs the payer to transfer the money to the payee by letter after selling the foreign exchange. Because the postal journey takes a long time, banks can use customers' funds during the postal journey, so the exchange rate of letter transfer is lower than that of wire transfer.

3. Standard exchange rate

Standard foreign exchange rate means that when a bank sells foreign exchange, it draws a draft paid by its foreign branch or agent bank and gives it to the remitter, who carries it with him or sends it abroad for withdrawal. Because there is a time interval between selling and paying foreign exchange, banks can occupy customers' funds during this time, so the exchange rate of foreign exchange is generally lower than that of wire transfer.

(5) From the perspective of the delivery period of foreign exchange transactions:

1, spot exchange rate

Also called spot exchange rate. Refers to the exchange rate used by foreign exchange buyers and sellers for delivery on the day or within two days of the transaction.

2. Forward exchange rate

It is the exchange rate for delivery in a certain period in the future, and the buyer and the seller sign a contract in advance to reach an agreement. On the delivery date, both parties will deliver the goods according to the predetermined exchange rate and amount. Forward foreign exchange transaction is an appointment transaction, which is introduced to avoid foreign exchange risks because foreign exchange buyers need foreign exchange funds at different times. There is a difference between the forward exchange rate and the spot exchange rate, which is called the forward spread. The difference is represented by premium, discount and average price. Premium means that the forward exchange rate is more expensive than the spot exchange rate, discount means that the forward exchange rate is cheaper than the spot exchange rate, and parity means that the two are equal.

(six) from the foreign exchange bank business hours:

1, opening exchange rate

This is the exchange rate used by foreign exchange banks when they start business and conduct foreign exchange transactions on business days.

2. Closing exchange rate

This is the exchange rate of foreign exchange banks at the end of foreign exchange transactions on a business day.

With the development of modern science and technology and the modernization of foreign exchange trading equipment, foreign exchange markets all over the world are integrated. Due to the time difference between major cities and the interaction of exchange rates in major foreign exchange markets, the opening exchange rate of a foreign exchange market is often influenced by the closing exchange rate of the foreign exchange market in the previous time zone. The opening price and closing price are only a few hours apart, but in today's exchange rate turmoil, there is often a big difference.