What is a currency?
The currency is a form of money issued by the government that is circulated within the country. The currency will be in the form of coins and paper notes. The currency is used as a medium to exchange for goods and services or assets and it is the basis for trading. Every country has its own official currency as in India it is rupees, in the US it is dollars etc.
FOREX: It is known as the foreign exchange market (FOREX) and it is the market for trading the currency. It is the largest market in the world and here one unit of currency is rarely equal to another unit of currency.sponsored links
Bid price: The price of a unit of currency that the buyer is willing to pay.
Ask price: The price of a unit of currency that the seller is willing to accept.
Bid-Ask spread: The price difference between the bid and ask price. The buyer wants the lowest possible deals whereas the seller wants the highest possible deals. The currency exchanges with banks, brokers or businesses are not operated on the basis of precise market rate. The financial people set their own exchange rates between the bid and ask spread and makes profits out of it.
Currency pair: The relative value of one unit of the currency against another unit of currency. The reverse of the pair is not the same but they are different currency pair. The first is known as base currency and the second is known as quota currency.
Major currencies: The most traded currencies in the world and that doesn’t change year-to-year are US dollar (USD), Euro (EUR), yen (JPY), British pounds (GBP), Australian dollar (AUD), Canadian dollar (CAD), and Swiss franc (CHF).
What is a currency exchange rate?
An exchange rate is defined as the rate of exchanging one country currency to another countries currency. The exchange rates have two terms one is domestic currency and the other one is foreign currency. The currency can be quoted directly or indirectly. In the direct, the price of a foreign currency is expressed in terms of the domestic currency and in an indirect, the price of the domestic currency is expressed in the terms of foreign currency. The exchange rate quoted against another currency is known as cross-currency or cross rate.
The currency convertibility is defined as converting local currency to another currency or vice-versa with or without the government intervention.
The amount of currency that can be traded on the international market without restrictions or limitations and government doesn’t impose a fixed or minimum value on the currency in international trade.
The international investments flowing in and out of the country is controlled by central banks. Some domestic trades are handled without any special requirements and have some significant restriction on the international investment and need special approval.
Some nations currency does not participate in the FOREX market and not allowed to convert by individual or companies.
The components included in the currency calculators are:
With live exchange rate:
- Amount: The amount that has to be converted.
- From: Which nation currency has to be converted.
- To: To which currency that has to be converted.
Customized currency exchange rate:
- Exchange rate for currency: The exchange rate of the currency of that nation’s currency.
- Amount to exchange: The sum of the amount that has to be converted.
Using this currency calculator we can estimate the value of currency after the conversation. The values can be calculated with live exchange rates and customized exchange rates.