Currency is regarded as the major aspect of any trading. The overall finance is backed by the currency. The value of one country’s currency in respect of any other country’s currency is an important aspect whenever any individual is preparing to go to any foreign country or for other purposes. So, it is essential to know about the exchange rate.
Domestic Currency and Foreign Currency
The paper currency is involved with a rich history in India. During the rule of British East India Company, it was issued firstly. RBI is associated with a different department that is known as issue department. The liabilities and assets of the issue department are retained separately from that of Banking Department. Basically, the expression exchange rate is involved with two components. One is the domestic currency and another is a foreign currency. They may be quoted indirectly or directly. In case of the direct quotation, the foreign currency’s unit price is represented in a form of that domestic currency and for indirect quotation, the domestic currency’s unit price is demonstrated as foreign currency.
The particular rate is associated with a particular base currency along with a counter currency. Whenever it is a question of the direct quotation, the base currency is a foreign currency and the counter currency is a domestic currency and it is completely reverse in the indirect quotation. In most of the exchange rates, the US Dollar is considered as a base currency and some other currencies are regarded as a counter currency. But, some exceptions are there in this particular rule like the Commonwealth and euro currencies like the New Zealand dollar, Australian dollar, and British pound.
There are lots of websites that are providing the opportunity of converting various currencies so that you can get some idea about the value of your country’s currency. The rates for exchanging the currencies for most of the currencies are basically represented to the four places following the decimal. It’s exception is Japanese yen currency quotation that is associated with the quote of two places succeeding the decimal. The rates of exchange may be fixed or floating and can be of spot rate, forward or current rate type.
The Finance of any country is involved with various factor in which each and every factors are equally important. If you want to know about currencies and its involved attributes in detail, then you can follow any popular finance related website.