Necessity of Foreign Exchange

No country is self-sufficient in this world. Every one is more or less dependent on another, for goods or services. Say, Bangladesh has cheap manpower whereas Saudi Arabia has cheap petroleum. So Bangladesh is dependent on Soudi Arabia for petroleum and Saudi Arabia is dependent on Bangladesh for cheap manpower. People of one country is going to another country for Education, Medical service etc. One country exports agricultural commodities, another country exports industrial products. All these transactions needs foreign currency & are related to foreign exchange.

Foreign Exchange

Meaning: 'Foreign Exchange' means Foreign currency. If we consider 'Foreign Exchange' as a subject, then it means all kinds of transactions related to foreign currency, as well as currency instruments, such as draft, MT, TT, TC, Payment order & foreign trade. In other words foreign exchange deals with foreign financial transactions.