The concept of currency
Each state has their money. They serve as a medium of exchange or payment, the unit of account, store of value, and also used as a measure of deferred payments. Currency(From the Italian valuta-value) - a monetary unit of the country, the underlying monetary system of the state. The general rule of international trade is an expression of prices of goods in national currency units. In Russia - the ruble, in the U.S. - the U.S., Great Britain - pound sterling. If within their own country people use the national currency, the economic relations between the national monetary units play the role of world money. Money used in international payments, also called currency. Therefore, currency should be considered as a monetary unit of the State, shall be treated as the domestic market and abroad, as well as monetary units of the international monetary and financial organizations.
Group Rates
Normal functioning of international commodity-money relations is possible only when the free exchange of national currency to other countries, free circulation of money outside the state border. Thus, the most effective integration into the international division of labor is possible only on the basis of hard currency (convertible currency characterizes the quality). Convertibility - is a condition of such a nature and monetary and financial system, in which for holders of local currency guaranteed freedom of performing certain operations, not only domestically but also abroad. Achieving and maintaining the country's convertibility of its national currency - an important economic problem.
According to the degree of convertibility should distinguish 4 groups of currencies.
1) Freely-convertible currency (FCC) . This currency freely and exchanged for other currencies. SLE has internal and external reversibility, ie the same mode of exchange. The exchange of hard currency is distributed to all current transactions relating to foreign economic activities of the country.
Among the SLE is the currency of the country whose laws are repealed and does not provide any restrictions on any types of transactions with it. According to the bank the bank CLS - an international organization that provides non-cash payments of foreign exchange transactions worldwide, is currently in the world, there are 17 SLE: Euros, U.S. Dollar, British Pound, Swiss Franc, Japanese Yen, Canadian Dollar, Australian Dollar, New Zealand dollar, Hong Kong dollar, Singapore dollar, South Korean Won, Swedish, Danish and Norwegian krone, South African rand, the Israeli shekel and Mexican peso.
A special category of hard currency is reserve currency. It is an international payments and reserve funds, serves as a base definition of currency and exchange rates to other countries, is widely used for currency intervention to regulate exchange rates of participating countries of the world monetary system. Initially, the role of reserve currency acted Pound, who played a dominant role in international payments. Decisions conference in Bretton Woods (USA, 1944), along with the pound sterling as an international payment and reserve currency has used the U.S. dollar, which soon became a dominant position in international payments. To reserve currency also include the euro, Swiss franc and Japanese yen. Nevertheless, the share of U.S. dollar accounts for the vast majority of foreign exchange reserves.
2) Partially convertible currency (PCI) - The currency of the countries in which there are foreign exchange restrictions for residents and for certain types of currency transactions. PCI has internal convertibility. An example is the Russian ruble.
3)3amknutaya (nonconvertible) currency: - Operates only within one country - not be exchanged for foreign currency - in the countries there are various restrictions and prohibitions on the import and export, buying and selling, the exchange of national and foreign currencies.
4) Clearing Currency - It is estimated currency units that exist only in an ideal (countable) form as the accounting records of banking transactions on mutual supply of goods and services by participating countries of payment agreement. Example is SDR (Special Drawing Rights) - International counting currency, issuance of which carried a legal decision by the International Monetary Fund (IMF). SDR does not have its own value and real security, they are used for clearing international payments through the entries in special accounts, and as the unit of the IMF. Their main purpose - the role of currency benchmark, which performs its tasks, based on the principle of multi-currency basket.
What is the international currency market
International currency market - A special sphere of economic relations associated with the implementation of operations (purchase, sale, exchange), and payment documents in a freely convertible currency (checks, bills, telegraphic and mail transfers, letters of credit). International Monetary Market, formed through the correspondent relation between banks of different countries, is the mechanism through which made international cash transactions related to foreign trade, investment, tourism and other business and cultural relations. In many countries, buying and selling of foreign currencies is also on the stock exchange brokers and dealers.
In his regime the currency market are divided into free (In countries where there are no currency restrictions) and constrained (Where these are the limits and currency transactions are possible only with the permission of the authorized organizations at the official rate).
Currency market operations are divided into: cashUnder which the issuance of foreign currency and payment of its equivalent in national currency are made immediately; UrgentWhere, by agreement of the parties, the issuance of foreign currency and payment shall be made through the equivalent of 1-3 months or more at a rate conditioned at closing, "swaps" under which combines two transactions - cash (for buying or selling foreign currency) and Emergency (on sale or purchase of the same currency, since courses in these transactions are recorded at the time of bargaining, members guarantee themselves against changes that might occur under conditions of continuous fluctuations) arbitration in which the initiator of the transaction using the difference in exchange rates and interest rates for credit for a certain period of time in different currency markets for profit.
Exchange Market FOREX
The international currency market has a name Forex (FOReign EXchange market) - Is the interbank market, which was formed in 1971, when international trade shifted from fixed exchange rates to floating ones. The main features of Forex market are:
In Forex is exchanged solely non-cash money;
The market volume than all the rest. The daily volume of transactions on the Forex market is estimated at 1.3 trillion dollars a day, and it is from one to three annual budgets of the United States. For comparison: the daily turnover of U.S. securities exchanges is $ 300 billion, stock market - 10 billion dollars. New York stock market requires six months to reach a daily turnover of currency market;
The Forex market operates around the clock. Indeed, once the market is international, then at any time for him to be, you can access from anywhere in the world. After all, while in Japan the morning, then in Europe - the dead of night, and in America - evening. So it turns out that foreign exchange transactions are carried out round the clock seven days a week;
The Forex market is OTC, and he has no definite location. In this regard, the Forex is similar to the Internet: in different parts of the world's people, using various means to communicate among themselves, buy and sell currencies. So what Forex - is not a specific place, or organization, and the network, through which the river flowed currency;
For information on the status of the Forex market in real time, as well as financial and economic news, use of international information systems, such as Tenfore, Reuters, Comstock and others.