In a broad sense, all assets owned by a country in foreign currency. It refers to the flow of money between countries and a specialized commercial activity of exchanging one country's currency for another country's currency to pay off international creditor's rights and debts. In fact, it is the creditor's rights held by the monetary management authorities in the form of bank deposits, treasury bonds, long-term and short-term treasury bonds, etc., which can be used when the balance of payments is in deficit.

Narrow sense: various means of payment expressed in foreign currency and generally accepted by all countries, which can be used for international settlement of creditor's rights and debts. It must have three characteristics: affordability (assets that must be expressed in foreign currency), availability (claims that can be compensated abroad) and convertibility (foreign currency assets that can be freely converted into other means of payment).

Extended data:

The transaction method is as follows:

1, firm transaction

Firm foreign exchange transactions are those foreign exchange treasures and foreign exchange margin transactions of banks. The former can open an account through a bank, while the latter is mainly for some foreign dealers to open an account in China, because there is no domestic dealer. Firm foreign exchange trading is also called spot foreign exchange trading.

2. Virtual transactions

Foreign exchange margin trading, also known as virtual trading, means that investors use their own funds as a guarantee to enlarge the financing provided by banks or brokers for foreign exchange trading, that is, to enlarge the trading funds of investors. The financing ratio is generally determined by banks or brokers. The greater the financing ratio, the less money customers need to pay.

3. Transaction terms

Foreign exchange spread: In the foreign exchange market, the buying price and selling price are usually quoted at the same time. The difference between the buying price and the selling price is called the price difference.

3. Direct foreign exchange quotation

Direct foreign exchange refers to transactions involving dollar currency pairs. For example: Euro/USD, USD/JPY, GBP/USD.

Cross refers to transactions between two non-American currencies. For example: EUR/GBP, EUR/JPY, GBP/JPY.

4. Option: an option that can be exercised on any working day from the issue date.

5. Value-added: When the price of a currency increases due to market demand, the currency is called "value-added".

6. Arbitrage: buying or selling a financial instrument and doing exactly the same reverse operation in the relevant market at the same time, so as to achieve the purpose of taking advantage of the smaller price difference between different markets.

7. Selling price: the price at which a currency combination or security is sold; The price quoted by investors when they buy a currency combination. Also called "bid", "selling price" or "selling exchange rate".

Baidu encyclopedia-foreign exchange