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.
Links of Previous Main Topic:-
- Definition of Economics
- Economic Problem
- Market Equilibrium
- Employment and Unemployment
- Measuring GDP and Economic Growth
- Economic Growth Macroeconomics
- The Exchange Rate and the Balance of Payments
- The Foreign Exchange Market
Links of Next Macroeconomics Topics:-
- Trading Currencies
- Exchange the Rates Exchange Rate and the Balance Of Payments
- Questions about the U S Dollar Exchange Rate
- The Demand for One Money Is the Supply of Another Money
- Demand in Foreign Exchange Market
- Supply in the Foreign Exchange Market
- Exchange Rate Fluctuations
- Changes in the Exchange Rate
- Fundamentals Expectations and Arbitrage
- The Real Exchange Rate
- Exchange Rate Policy
- Flexible Exchange Rate
- Crawling Peg
- Financing International Trade
- Borrowers and Lenders
- Debtors and Creditors
- Is U S Borrowing For Consumption
- Where Is the Exchange Rate
- The Dollar and Carry Trade
- Expenditure Multiplier Know the Keynesian Model