Settlement of foreign exchange refers to the settlement of purchase and sale of foreign exchange by enterprises or individuals according to the exchange rate. According to the needs of import business, professional import and export companies buy foreign exchange from professional foreign exchange banks in their own currency according to the foreign exchange quotation published by the state, or sell the foreign exchange obtained from export to foreign exchange banks at the quotation price and convert it into their own currency. This behavior is called foreign trade settlement.

China's foreign exchange quotation regulations are published daily by the Bank of China, and foreign exchange management is also carried out by the Bank of China. There are buying price and selling price. The selling price is higher than the buying price, and the difference between them is the handling fee of bank exchange, or exchange income.

Extended data:

The method of foreign exchange settlement is the way that the consignor or his agent of export goods collects foreign exchange through the bank. The code of settlement method is divided into remittance, collection, letter of credit and others.

1. Remittance includes:

(1) Remittance: The buyer will hand over the payment to the bank at the place of import, and the bank will issue a payment power of attorney, mail it to the bank at the place of export, and entrust it to pay the seller.

(2) T/T: At the request of the buyer, the bank at the place of import directly sends a payment authorization by telegram, entrusting the bank at the place of export to pay the seller.

(3) Remittance by draft: The buyer buys a bank draft from the bank at the place of import and sends it to the seller, and the seller or his designee takes the ticket to the relevant bank at the place of export to withdraw money.

2. The series includes:

(1) D/P means that the seller instructs the remitting bank to hand over the documents only if the buyer pays for the goods.

(2) D/A: After the buyer accepts the bill of exchange, he can obtain the documents, take delivery of the goods, and pay the payment when the bill is due.

3. Letter of credit: A letter of credit is a certificate that the bank guarantees the payment of the buyer and the seller. According to the buyer's application, the bank will open a letter of credit to guarantee payment, that is, as long as the seller submits documents that meet the requirements of the letter of credit, the bank will guarantee payment.

References:

Baidu encyclopedia-settlement of foreign exchange