(一) Foreign exchange
The concept of foreign exchange has a double meaning, that is, it can be divided into dynamic and static.
The dynamic concept of foreign exchange refers to the flow of Currency among countries and the exchange of one country's currency into another country's currency to pay off international claims, A specialized business activity related to debt relationships. It is the abbreviation of international exchange.
The static concept of foreign exchange is divided into a narrow foreign exchange concept and a broad foreign exchange concept.
Foreign exchange in the narrow sense refers to various payment methods expressed in foreign currencies that are generally accepted by all countries and can be used for international settlement of claims and debts.
It must have three characteristics:
(1) Affordability. Must be an asset denominated in a foreign currency.
(2) Availability. It must be a claim that can be compensated abroad.
(3) Interchangeability. It must be a foreign currency asset that can be freely converted into other means of payment.
Foreign exchange in a broad sense refers to all assets owned by a country expressed in foreign currencies. The International Monetary Fund (IMF) defines this as: “Foreign exchange is the currency used by monetary administrations (central banks, monetary management agencies, foreign exchange stabilization funds and the Ministry of Finance) in the form of bank deposits, Treasury bills, long-term and short-term government securities, etc. A creditor's right that can be used when the balance of payments is in deficit."
Simply put, foreign exchange is foreign currency or currency expressed in foreign currency that can be used for international settlement. means of payment. Article 3 of the "Foreign Exchange Management Regulations" promulgated by our country in 1997 stipulates the specific content of foreign exchange as follows:
(1) Foreign currency. Including banknotes and coins.
(2) Foreign currency payment voucher. Including bills, bank payment vouchers, postal savings vouchersCertificate etc.
(3) Foreign currency securities. Including government bonds, corporate bonds, stocks, etc.
(4) Special Drawing Rights, European Monetary Unit.
(5) Other assets denominated in foreign currencies.
(2) Exchange rate
Exchange rate, also known as exchange rate, refers to the exchange rate of one week’s currency to another country’s currency The price expressed, or the price comparison between the two currencies.
In the foreign exchange market, the exchange rate is displayed in five digits, such as:
Euro -Yuan EUR0.9705
Japanese yen JPY119.95
Pound CBPl.5237
Swiss franc CHFl.5003
The smallest unit of change in the exchange rate is one point, that is, a change in the last digit of one digit , such as:
Euro-yuan EUR0.0001
Japanese yen JPY0.01
GBP GFIP0.0001
Swiss franc CHF0.0001
According to international practice, three English letters are usually used to represent the name of a currency. The English after the above Chinese name is the English code of the currency.
The pricing methods for expansion rate are divided into two types: direct pricing method and indirect pricing method.
(l) Direct pricing method. The direct pricing method, also called the payable pricing method, uses certain units (1, 100, 1000, 10000) of foreign currency as the standard to calculate how many units of domestic currency should be paid. It is equivalent to calculating how much local currency is payable to purchase a certain unit of foreign currency, so it is called the price payable method. Most countries in the world, including China, currently adopt the direct pricing method.In the international foreign exchange market, the Japanese yen, Swiss franc, Canadian dollar, etc. are all quoted directly, for example, 119.05 yen is equivalent to 119.05 yen per US dollar.
Under the direct pricing method, if the amount of domestic currency converted into a certain unit of foreign currency is greater than the previous period, it means that the value of the foreign currency has increased or the value of the local currency has decreased, which is called an increase in the foreign exchange rate; On the contrary, if the same amount of foreign currency can be exchanged for the same amount of foreign currency, it means that the value of the foreign currency has fallen or the value of the domestic currency has increased, which is called a fall in the foreign exchange rate. That is, the value of the foreign currency is directly proportional to the rise or fall of the exchange rate.
(2) Indirect pricing method. The indirect pricing method is called the receivable pricing method. It uses a certain unit (such as 1 unit) of domestic currency as the standard to calculate the number of units of foreign currency receivable. In the international foreign exchange market, Euro-dollar, British pound, Australian dollar, etc. all use indirect pricing methods. For example, Euro-yuan 0.9705 means 1 Euro-yuan is worth 0.9705 US dollars.
In the indirect pricing method, the amount of domestic currency remains unchanged, and the amount of foreign currency changes with the comparative change of the value of domestic currency. If a certain amount of domestic currency can be exchanged for less foreign currency than in the previous period, this indicates that the value of foreign currency has increased and the value of local currency has decreased, that is, the foreign exchange rate has increased; conversely, if a certain amount of domestic currency can be exchanged for more foreign currency than in the previous period, it means that the value of foreign currency has decreased. , the value of the local currency rises, that is, the foreign exchange rate falls, that is, the value of the foreign currency is inversely proportional to the rise or fall of the exchange rate.
The quotations in the foreign exchange market are generally two-way quotations, that is, the quotation party quotes its own buying price and selling price at the same time, and the customer decides the buying and selling direction. The smaller the spread between the buying and selling prices, the smaller the cost for investors. The normal quotation spread for inter-bank transactions is 2 to 3 points. The quotation spreads of each bank (or dealer) to customers vary greatly depending on the situation. At present, the quotation spread for foreign margin transactions is basically 3 to 5 points, and that of Hong Kong, China is 6 to 5 points. At 8 o'clock, the actual trading of domestic banks ranges from 10 to 40 o'clock.
