Question

What do you mean by foreign exchange? Explain the importance of foreign exchange.

Answer 1

Answer:

Foreign exchange, or forex, is the conversion of one country's currency into another. In a free economy, a country's currency is valued according to the laws of supply and demand. ... Another important factor of demand occurs when a foreign company seeks to do business with another in a specific country.

foreign exchange is the trading of different national currencies or units of account. It is important because the exchange rate, the price of one currency in terms of another, helps to determine a nation's economic health and hence the well-being of all the people residing in it.