A currency is all foreign currency, that is, official currencies other than the legal currency in the country itself.

While the local currency is the reference currency of a country, the local and official currency of a territory. Currency is considered to be all those currencies other than those of the country of origin.

The meaning of currency

It is also necessary to differentiate between currency and currency. While the second refers to the set of metals and paper, which is what is considered cash money, the currency refers to the nominative term of the currency of another country. At the end of this article, we will expand the explanation about the difference between currency and currency.

In a globalized world where there are many countries and monetary systems conducting transactions, it is common to find companies and States that have different currencies to trade. In the case of Europe, there is a monetary union, that is, the same currency for a group of countries.

What is the value of a currency?

Currency is considered an asset, since it is money from other countries and has a value. This value is achieved by quoting or marking a fixed value by a state or organization. In the currency markets, every day currency purchase and sale transactions are carried out based on the interest that currency has for a subject, so it is common for them to fluctuate, to change in value.

Like the stock market, interest or disinterest in a currency causes it to appreciate or depreciate. If we want to trade with China or we have investments in the United States, we will have to acquire yuan or dollars respectively, and the volume of purchase and sale determines the value of one currency with respect to another.

Relationship between currency and exchange rate

Each currency has a specific value with respect to another, a relationship known as the exchange rate. The relationship can be direct (for example, for a European, knowing how many euros is 1 Colombian peso) or indirect (how many Colombian pesos is one euro).

Difference between currency and currency

A common question regarding the concepts of currency and currency is about the difference between currency and currency. Although they are very similar concepts, their meaning can be differentiated, according to the following two points.

  • When we refer to physical money, we use the word currency (or bill). For example, we can change a 2 euro coin for two one euro. On the contrary, when we refer to electronic money, we usually use the concept of currency.
  • Another difference is that the concept of currency is used to refer to a foreign currency, while that of currency is a more general concept. However, it is common to use the concept of foreign currency as a synonym for foreign currency.

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