Definition of Foreign Exchange, Foreign Exchange Sources and Foreign Exchange Functions (Complete)

Definition of Foreign Exchange, Foreign Exchange Sources and Foreign Exchange Functions (Complete) – For the discussion of this article regarding foreign exchange. Maybe some people are already familiar with the term foreign exchange. But for some people there are still those who do not know what foreign exchange is.

Definition of Foreign Exchange, Foreign Exchange Sources and Foreign Exchange Functions (Complete)

For this reason, we want to discuss it so that every reader who reads this article can understand the true meaning of foreign exchange. For that, let's just start the discussion about this article which will be explained below.

Definition of Foreign Exchange

Foreign exchange is all goods that can be used as international payment instruments. And there is also another understanding of foreign exchange, namely foreign exchange is a number of foreign currencies to finance an international trade transaction. Foreign exchange also consists of foreign exchange, namely the currency accepted by all countries in the world, namely the Dollar Law ($), Japanese Yen, Euro, Pound sterling (UK), France-Franc, Switzerland-Franc, Dollar-Canada, DM (Deutshe Mark) Germany, securities and also gold that is valid as payment international.

This is included in the supervision of the monetary authority, namely the Central Bank. Foreign exchange is the same as a function of money in general, but foreign exchange is different in international transactions or between different countries which serves as a means of payment between countries, exchanges goods and services, accumulates wealth, monetary reserves, and measures riches.

The government is obliged to have foreign exchange reserves so that international trade in maintaining a monetary stability and also the macro economy of a country. And foreign exchange reserves are a strong or weak monetary indicator of a country's economy.

Meanwhile, the meaning of foreign exchange reserves is the amount of foreign currency that is reserved by the Central Bank (Bank Indonesia) for an investment financing needs as well as foreign obligations, such as import financing and also other financing to third parties foreign.

Sources of Foreign Exchange

After the understanding has been explained, for the next it will be explained about the sources of foreign exchange from a country which will be explained in the following.

• From goods export activities
• A service provider
• Tourist
• Foreign loan
• Grants and gifts from abroad
• If a citizen works abroad

Types of Foreign Exchange

Apart from the two explanations that have been given, there are more explanations that will be given below.

General Foreign Exchange

Is a type of foreign exchange that can be obtained without any obligation to return, for example exports, the provision of services and also others.

Foreign Exchange Credit

Is a type of foreign exchange that can be obtained with a condition to return, for example a foreign loan.

Foreign Exchange Function

There have been three explanations given, but there are still further explanations that will be explained below.

• As a means of payment of foreign debt.
• As a means of financing an international relationship, for example, such as official travel, diplomatic sovereignty, consultants and so on.
• For international payment instruments such as exports, imports and so on.
• As a source of state income, and also many others.

A few explanations that can be given about knowledge briefly about Definition of Foreign Exchange, Foreign Exchange Sources and Complete Foreign Exchange Functions, hopefully by reading this article can add an insight and knowledge for readers, may be useful