In China, our functional currency is RMB. When we need to pay foreign currency after a foreign currency transaction, it is called buying foreign exchange and paying in foreign currency.
Buying foreign exchange is a transfer transaction, that is, using the local currency in the account to exchange foreign currency, which is equivalent to foreign exchange trading. The converted foreign currency is still in the account or bank card, and no cash has been withdrawn.
However, after 20 14, China opened the policy of foreign currency exchange, and individuals and institutions that need to purchase foreign exchange can buy foreign currency through regular foreign currency exchange companies and get cash. Therefore, purchasing foreign exchange is no longer a simple banking business.
2. Settlement of foreign exchange refers to the settlement of buying and selling 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:
Reasons for foreign exchange transactions:
1. Trade and investment: importers and exporters pay in one currency when importing goods, and charge in another currency when exporting goods. This means that they receive and pay in different currencies at the time of settlement.
Therefore, they need to convert some of the money they receive into money that can be used to buy goods. Similarly, a company that purchases foreign assets must pay in the currency of the relevant country, so it needs to convert its own currency into the currency of the relevant country.
2. It is speculated that the exchange rate between the two currencies will change with the change of supply and demand between the two currencies. Traders can make a profit by buying a currency at one exchange rate and then selling it at another more favorable exchange rate. Speculation accounts for the vast majority of transactions in the foreign exchange market.
3. Hedging: Due to the exchange rate fluctuation between two related currencies, companies (such as factories) with foreign assets may suffer some risks when converting these assets into local currency.
When the value of foreign assets denominated in foreign currency remains unchanged for a period of time, if the exchange rate changes, the value of such assets will be converted into domestic currency, which will generate profits and losses. Companies can eliminate this potential profit and loss by hedging. This is the execution of a foreign exchange transaction, and the transaction result just offsets the gains and losses of foreign currency assets brought about by exchange rate changes.
Baidu encyclopedia-purchasing foreign exchange
Baidu encyclopedia-settlement of foreign exchange