What are the characteristics of foreign exchange?
If you want to be good at foreign exchange, then investors should have a good understanding of the characteristics of foreign exchange, so that they can effectively carry out foreign exchange speculation and help to obtain good benefits. However, what are the characteristics of foreign exchange? There may be many investors who are not clear. Let's take a look at it together!
Forex must have the following three characteristics:
1. Must be expressed in currency, with International.
For example, if an import and export company holds a bank note or a bank check in currency, it cannot be said to hold foreign exchange. Because the currency is the local currency for this import and export company; this check is expressed in currency (local currency) and is not foreign exchange. If the company holds a bank draft in the US, Japan or in pounds sterling, it is holding foreign exchange.
Second, it must be freely convertible and versatile.
The so-called free exchange means that the holder of a certain foreign exchange (whether cash or bills) can freely and unrestrictedly convert it into other currencies and is generally accepted in international payments. Due to the differences in economic strength and foreign exchange management systems in various countries, many countries' currencies are not capable of freely convertible currencies. It can be seen that the currency is not necessarily foreign exchange, only the currency with freely convertible ability is foreign exchange.
Such as the United States, Japan, Swiss francs, marks, pounds, etc., can be called foreign exchange. Even among these major currencies, only the Swiss franc, the United States, etc. truly have unlimited free exchange capacity. Take the United States as an example, regardless of whether the holder is a citizen or a business transaction or a financial transaction, it can be freely exchanged. The pound and the day have only partial convertibility. For example, the UK allows only non-UK residents or overseas to be freely convertible.
3. It must be a bill or payment certificate that can obtain credit status in international settlement activities, and it is compensable.
If a company holds a US cheque issued by a bank that cannot be exchanged, although it is also a payment certificate in foreign currency, it cannot be exchanged, so the company cannot be considered to have a foreign exchange.
The above is the introduction of the characteristics of foreign exchange, I hope that friends can learn very well, in the foreign exchange field can earn substantial benefits.