The role of money in foreign transactions.

[TOZZIBLINKZ]

Both internal and external trade and similar because both are transacted with money , yet they still differ in many ways . for example in internal trade buyers and sellers use the same currency and so no currency problem arises . But in foreign trade however this is not the case . however money plays an important role in the international transactions . Countries have different currencies and it becomes necessary to change one for another for trade to take place . Money also act as a unit of measurement in which records of transactions are kept just as individuals and firms keep records of their sales and purchases in order to know whether or not they are making profit . Countries also keep records of the money they spend on import and the money they earn from export in order to know whether international trade has been profitable or not in the period analysed .

Foreign exchange market comes into existence as a result of the need to resolve the differences between 1 countries currency and that of the other money also facilitates economic development by means of foreign exchange , foreign capital , and skills are being imported thereby assisting the development process of the underdeveloped .

 

[Kingsley]

That is true, money is the only generally accepted medium of exchange in the world. The world generally accepted is what really makes money very unique from all other forms of payment. Money is indeed unique because it also used as a standard of measurement of items, everything is measured by money. Money again is used as a store of value. So when we look at all the qualities of money we will realise that there is nothing else that can really serve the purpose that money is playing currently.

Now when it come to international or foreign trade you will realise that the only way for you to trade in the international community you will surely require mone to serve as the medium of exchange. Even in the when we look at forex trading what we simple do there in the market is buying one form of currency after converting from one from of currency to another. And we will the price no the currency appreciate when then sell to make profit, but if the trade goes against you then you might suffer some loses. The forex market has really made alot of people very comfortable all thanks to money.