The necessary knowledge for foreign exchange speculators is foreign exchange knowledge. Only with comprehensive foreign exchange knowledge can one gain profits in foreign exchange market transactions. I believe that there are still some foreign exchange speculators who are not very clear about the difference between foreign exchange and domestic exchange. Today we will have a detailed understanding of the difference between the two.
In fact, for the foreign exchange market, it is also necessary for foreign exchange speculators to conduct certain basic analysis and technical analysis when making choices, so that they can be sure of making profits. What is the difference between foreign exchange and domestic exchange? The difference between foreign exchange and domestic exchange is mainly manifested in the following aspects.
1. the balance of payments
In domestic exchange, since the sub-claims and debtors are all in the same country, the balance of payments will be offset without affecting the balance of payments. However, in the case of foreign exchange, since the claimant and debtor are not in the same country, the balance of payments is affected, and the result of the exchange is also recorded in the balance of payments.
2. foreign exchange management law
In foreign exchange transactions, the “Foreign Exchange Control Law” formulated for the purpose of ensuring the steady development of the domestic economy, foreign exchange market stability and balance of payments should be implemented, and according to the type of transaction, an application should be made to the relevant authority in advance and permission should be obtained , otherwise, transactions will be restricted. Any violation of the foreign exchange management law will be subject to severe legal sanctions.
3. centralized settlement system
Domestic exchange can be settled centrally through the Bank of China, but in foreign exchange, there is no such convenient centralized settlement institution. The Bank for International Settlements established in Basel (Switzerland), the International Monetary Fund in Washington (head country), and the World Bank are all non-world foreign exchange centralized settlement institutions. These banks only transfer the borrowing and lending relationship of different currencies in foreign exchange transactions through their respective overseas branches or different currency deposit settlement accounts (foreign exchange settlement accounts) set up in correspondent banks (correspondent banks).
All countries in the world have unique currencies circulating in their countries, and all have legal guarantees for the circulation of their own currencies. Therefore, this special currency will be unimpeded in a country, no matter in the city or in the countryside. However, once the currency crosses the border, it will immediately lose its “magic power” of circulation. For example, everyone is willing to accept RMB in China, but it is generally impossible to take it to the United States or Europe to buy goods. Conversely, using the dollars left over from overseas trips to buy goods in the domestic market will also not work. In short, one of the biggest features of foreign exchange is that it is necessary to “exchange” different currencies during the transaction.
The above is the introduction of the difference between foreign exchange and domestic exchange, I hope it will be helpful to you.
