conversion - a transformation of something into something else, or the implementation of equivalent exchange.In particular, the conversion (or convert) Currency translation is a sum of money from one currency to another.You could say that conversion is a unique combination of constraints and freedoms for participating in the foreign currency transactions when they exchange banknotes of one country to the relevant signs of other countries.
order for the country was included in the global economy and had the opportunity to develop their foreign trade activities, it should have convertibility of national currencies.
Convert currency has a positive effect on the investment climate in the country.Companies in need of capital, have the ability to attract funds from abroad.On the other hand, foreign investors are able to freely transfer abroad the money earned in the country and reinvest profits.
Currency divided by the degree of convertibility of the following types:
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freely convertible,
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limited (partial) convertible,
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closed (non-convertible),
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clearingcalculations.
freely convertible currency (FCC) - a currency that is freely and without restrictions exchanged for banknotes of other states and countries.It is usually full of internal and external reversibility, ie the same communication mode.
Field of the exchange of hard currency includes the current operations that are related to daily activities such as foreign trade foreign trade exchange, non-commercial payments, foreign tourism, as well as transactions relating to foreign investment or movement of foreign loans.
course freely convertible currency is established only through open tenders, which are held at the currency exchange.Thus, the state deprived of the opportunity to artificially limit the value of the national currency, or to use the exchange rate band.
The only options available to the state to intervene - is currency intervention, which may make the National Bank of the country.However, it should only be used by market methods, that is, reduction in value of the currency by increasing its offer on the stock exchange.
In today's world a freely convertible currency there is only a limited number of countries: US, UK, Japan, etc.(a total of only from 17 countries).Currently, CRS is about 15% of all existing currencies.
National Bank of any country's currency reserves should be created to make international payments.For this role is best suited freely convertible currency.Some of them are called - reserve currencies.
to perform foreign trade and financial transactions are used almost exclusively US dollars, euros, Japanese yen, British pounds and Swiss francs, and it is in these currencies are kept almost 100% of foreign exchange reserves in the world.
freely convertible currency, in turn, is an indicator of economic stability of the state or country.As a result, the free exchange of currency, all foreign economic activity of the state is greatly simplified.
There are currencies that may be involved in financial transactions on an international level, but the share in other countries than any monetary unit.They are called partial or limited convertibility.
Forex trading is also carried out exclusively in freely convertible currencies.They have the highest liquidity, which allows you to quickly exchange one for another.
