Whether we like it or not, currency is a significant part of business and trade and it is just as important as the ones who basically engage in such a field. It facilitates the easy and convenient transfer of goods and/or services. It makes trading uncomplicated and quick.
One form of the many forms of currency is money. We use money almost everyday. We are not able to ride the taxi to work or school if we don’t have it, we won’t be able to shop if we don’t earn it—in sum, we won’t be able to get the things we need if we don’t have enough money. Money is a tangible form of currency we use in business and trades. When we deal with big or small companies, whether we buy shares on them or buy stocks from them, money is as important as it is in providing us with out daily needs.
As a unit of exchange from one country to another for example, currency in the form of money can be converted from one to another, depending on the currencies that other countries use. For example, 1 yen in Japan may be exchanged for 0.009241 dollars in the US.
There are two classifications of currencies: the floating and fixed currencies. The basis of these two classifications is their exchange rate regimes.
Fixed exchange rate regime is the official, exchange rate set by the government of a country, particularly the central bank. This is maintained by means of the central bank’s buying and selling of its own currency in the foreign exchange market. What maintain the value of an American dollar, for example, are the reserves of foreign currencies being held (acquired through the trade in currencies of the central bank) by the central bank. To maintain the fixed rate of exchange of a country therefore means the abundance in trade and business dealings with other countries all over the world.