It has been observed that at a time when DVD players had been imported from Japan to Wal-Mart then they used to pay the amount in Japanese yen currency. Again when Japan bought an airplane from Boeing,they paid in U.S. dollars. So it has been pretty much evident that when a country is buying things from other country or in other words when a company is importing goods from another country, they pay on the terms of that country’s currency. This transaction is made irrespective of any material; it may be a DVD, airplane, bonds, stocks, insurance or any other possible thing.
Foreign money is roughly similar to U.S. money. Both have notes and coins which are issued by the central banks. They also have mints and banks as institutions for depositing money. The difference between coins and notes and deposits of U.S. money was explained earlier in chapter eight.
However, foreign currency is a bit way different from U.S. money. It is all about foreign money as in notes and coins. Bank deposits also cannot be ignored anyway. Thus the exchange of foreign currencies using buying and selling is what happens in foreign exchange market.
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