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foreign exchange
foreign exchange methods and instruments used to adjust the payment of debts between two nations that employ different currency systems. A nation's balance of payments has an important effect on the exchange rate of its currency. Bills of exchange, drafts, checks, and telegraphic orders are the principal means of payment in international transactions. The rate of exchange is the price in local currency of one unit of foreign currency and is determined by the relative supply and demand of the currencies in the foreign exchange market. Buying or selling foreign currency in order to profit from sudden changes in the rate of exchange is known as arbitrage. The chief demand for foreign exchange within a country comes from importers of foreign goods, purchasers of foreign securities, government agencies purchasing goods and services abroad, and travelers.
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"foreign exchange." The Columbia Encyclopedia, 6th ed.. 2011. Encyclopedia.com. 31 May. 2012 <http://www.encyclopedia.com>. "foreign exchange." The Columbia Encyclopedia, 6th ed.. 2011. Encyclopedia.com. (May 31, 2012). http://www.encyclopedia.com/doc/1E1-foreigne.html "foreign exchange." The Columbia Encyclopedia, 6th ed.. 2011. Retrieved May 31, 2012 from Encyclopedia.com: http://www.encyclopedia.com/doc/1E1-foreigne.html |
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foreign exchange
foreign exchange Buying and selling national currencies. All currencies have an underlying value relative to the value of gold, registered with the International Monetary Fund (IMF). This value may deviate, and governments can control the amount of deviation by tactical trading on foreign exchange markets. Speculators may trade on foreign exchange markets in the hope of profiting from short-term fluctuations in the value, an activity known as arbitrage. International commercial companies and financial institutions also buy and sell foreign currencies.
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"foreign exchange." World Encyclopedia. 2005. Encyclopedia.com. 31 May. 2012 <http://www.encyclopedia.com>. "foreign exchange." World Encyclopedia. 2005. Encyclopedia.com. (May 31, 2012). http://www.encyclopedia.com/doc/1O142-foreignexchange.html "foreign exchange." World Encyclopedia. 2005. Retrieved May 31, 2012 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O142-foreignexchange.html |
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foreign exchange
for·eign ex·change • n. the currency of other countries. ∎ an institution or system for dealing in such currency. |
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Cite this article
"foreign exchange." The Oxford Pocket Dictionary of Current English. 2009. Encyclopedia.com. 31 May. 2012 <http://www.encyclopedia.com>. "foreign exchange." The Oxford Pocket Dictionary of Current English. 2009. Encyclopedia.com. (May 31, 2012). http://www.encyclopedia.com/doc/1O999-foreignexchange.html "foreign exchange." The Oxford Pocket Dictionary of Current English. 2009. Retrieved May 31, 2012 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O999-foreignexchange.html |
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