Foreign Exchange

Meaning and Definition of foreign Exchange

Foreign exchange is a currency which is not the local currency such currency may be used for settling cross-border transactions. it also refers to the mechanism of trading in the converting it into the currency of a foreign country.

Foreign exchange denotes the process of changing one national currency into another and transferring the ownership of money from one person to another. In India local currency is Rupee and the foreign currency can be dollar, Yen, Euro etc.

Foreign exchange Defined by section 2 of fama 1999:

1) ''Foreign currency" means any currency other than national currency.

2) "Foreign Exchange" means foreign currency which includes:

• Deposits, credit and balance payable in any foreign currency.
• Drafts, Traveller's cheques, letter of credit or bills of exchange expressed or draw in Indian currency but payable in any foreign currency.
• Drafts, Traveller's cheques, letter of credit or bills of exchange drawn by banks institution or person outside India, but Payble in Indian currency.