Encyclopedia

The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines the foreign exchange rate. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the Credit market.

USD – US Dollar

United States, Dollar
The US Dollar is the currency of United States. Our currency rankings show that the most popular United States Dollar exchange rate is the USD to EUR rate. The currency code for Dollars is USD, and the currency symbol is $. Below, you’ll find US Dollar rates and a currency converter.
Currency Facts
USD Stats
Name: US Dollar
Symbol: $ cent: ¢
Minor Unit:
1/100 = cent
Central Bank Rate: 2.25
Top USD Conversion:
USD/EUR

USD Profile
Inflation: 2.10%
Nicknames: greenback, buck, green, dough, smacker, bones, dead presidents, scrillas, paper
Coins:
Freq Used: 1¢, 5¢, 10¢, 25¢
Rarely Used: $1, 50¢
Banknotes:
Freq Used: $1, $5, $10, $20, $50, $100
Rarely Used: $2
Central Bank:
Federal Reserve Bank
Website: https://www.federalreserve.gov/

US Dollar History
The US central bank is called the Federal Reserve Bank (commonly referred to as “The Fed”). The USD is the most traded currency in the forex market and can be paired with all other major currencies. Common names for the USD include the greenback, buck, green, dough, smacker, bones, dead presidents, scrillas, and paper.

Importance of the US Dollar
The US Dollar is the most commonly converted currency in the world and is regularly used as a benchmark in the Forex market. As the dominant global reserve currency, it is held by nearly every central bank in the world. Additionally, the Dollar is used as the standard currency in the commodity market and therefore has a direct impact on commodity prices.

Dollarization of the USD
Due to its international acceptance, some countries like Panama and Ecuador use the USD as an official legal tender, a practice known as dollarization. For other countries the Dollar is an accepted alternative form of payment, though not an official currency for the country. Multiple currencies are pegged to the US Dollar:

Country Peg Rate
Aruban or Dutch Guilder            1.79000
Bahamian Dollar                          1.00000
Bahraini Dinar                              0.37690
Barbadian Dollar                          2.00000
Belizean Dollar                             2.00000
Bermudian Dollar                         1.00000
Cayman Island Dollar                  0.82000
Cuban Convertible Peso             1.00000
Djiboutian Franc                           177.721
Dutch Guilder                              1.79000
East Caribbean Dollar                 2.70000
Eritrean Nakfa                             15.0000
Hong Kong Dollar                        7.80000
Jordanian Dinar                           0.70900
Lebanese Pound                          1507.50
Omani Rial                                    0.38450
Panamanian Balboa                    1.00000
Qatari Riyal                                  3.64000
Saudi Arabian Riyal                     3.75000
United Arab Emirati Dirham       3.67250
Venezuelan Bolivar                     6.30000

Introduction of the US Dollar
In 1785, the Dollar was officially adopted as the money unit of the United States. The Coinage Act of 1792 created the first U.S. Mint and established the federal monetary system, as well as set denominations for coins specified by their value in gold, silver, and copper. In 1861, the U.S. Treasury issued non-interest-bearing Demand Bills and the very first $10 Demand Bills, featuring Abraham Lincoln, went into circulation. These bills quickly earned the nickname ‘Greenbacks’ because of their color. In 1863, a national banking system was established and guidelines for national banks were created. These banks were authorized to issue national currency secured by the purchase of US bonds. In 1914, the first $10 Federal Reserve notes were issued.

Silver and Gold Standard in the US
For years, the United States attempted to make a bimetallic standard, starting by adopting a silver standard based on the Spanish Milled Dollar in 1785. However, silver coins soon left circulation becoming completely suspended by 1806. By this time, most countries had already begun to standardize transactions by adopting the gold standard, meaning that any paper money could be redeemed by the government for its value in gold. The Bretton-Woods system was adopted by most countries to set the exchange rates for all currencies in terms of gold. Since the United States held most of the world’s gold, many countries simply pegged the value of their currency to the Dollar. Central banks maintained fixed exchange rates between their currencies and the Dollar, turning the US Dollar into the de facto currency of the world. In 1973, the US finally decoupled the value of the Dollar from gold completely.

EUR – Euro

Euro Member Countries, Euro
Our currency rankings show that the most popular Euro exchange rate is the USD to EUR rate. The currency code for Euros is EUR, and the currency symbol is €. Below, you’ll find Euro rates and a currency converter.

Currency Facts
EUR Stats
Name: Euro
Symbol: € cent: cent
Minor Unit:
1/100 = cent
Central Bank Rate: 0.00
Top EUR Conversion:
USD/EUR

EUR Profile
Inflation: 1.50%
Nicknames: Ege (Finnish), Pavo (Spanish), Yoyo (Irish English), Teuro (German)
Coins:
Freq Used: €1, €2, 5cent, 10cent, 20cent, 50cent
Rarely Used: 1cent, 2cent
Banknotes:
Freq Used: €5, €10, €20, €50, €100
Rarely Used: €200, €500
Central Bank:
European Central Bank
Website: https://www.ecb.europa.eu/

Euro History
The central bank in Europe is called the European Central Bank (ECB). Currently, 17 EU member states have adopted the Euro. It is the second-most traded currency on the forex market, after the US Dollar, and also a major global reserve currency. Other common names for the Euro include Yoyo (Irish English), Leru (Spanish), and Ege (Finnish).

Introduction of the Euro
On January 1, 1999, the Euro (EUR) was introduced as an account currency, replacing the European Currency Unit at par. The European Currency Unit was a theoretical basket of currencies rather than a physical currency in and of itself. Initially, eleven of the countries in the European Economic and Monetary Union replaced their own currencies with the Euro: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Greece followed suit in 2001, Slovenia in 2007, Malta and Cyprus in 2008, Slovakia in 2009 and Latvia in 2014.

Use of the Euro outside the EU
A number of sovereign states that are not part of the European Union have since adopted the Euro, including the Principality of Andorra, the Principality of Monaco, the Republic of San Marino, and the Vatican City. The Euro is also used in many territories, departments, and sovereign states of Euro-zone countries, such as the Azores, Balearic Islands, the Canary Islands, Europa Island, French Guiana, Guadeloupe, Juan de Nova, the Madeira Islands, Martinique, Mayotte, Reunion, Saint-Martin, Saint Pierre and Miquelon, to name just a few. The Euro is used as a trading currency in Cuba, North Korea, and Syria and several currencies are pegged to it.

Value of Obsolete National Currencies
Euro bank notes and coins began circulating in 2002 with old notes and coins gradually being withdrawn from circulation. The precise dates that each old currency ceased being legal tender and their official fixed rates are shown in the table below.

Legacy (Old) Currency                      Conversion from                                EUR Obsolete
ATS Austria, Schilling                        1 EUR = 13.7603 ATS                       28-Feb-2002
BEF Belgium, Franc                          1 EUR = 40.3399 BEF                       28-Feb-2002
CYP Cyprus, Pound                          1 EUR = 0.58527 CYP                       31-Jan-2008
DEM Germany, Deutsche Mark        1 EUR = 1.95583 DEM                      28-Feb-2002
EEK Estonia, Kroon                          1 EUR = 15.6466 EEK                       15-Jan-2011
ESP Spain, Peseta                           1 EUR = 166.386 ESP                       28-Feb-2002
FIM Finland, Markka                         1 EUR = 5.94573 FIM                        31-Jan-2008
FRF France, Franc                            1 EUR = 6.55957 FRF                       17-Feb-2002
GRD Greece, Drachma                     1 EUR = 340.750 GRD                      28-Feb-2002
IEP Ireland, Pound                            1 EUR = 0.78756 IEP                          9-Feb-2002
ITL Italy, Lira                                      1 EUR = 1936.27 ITL                        28-Feb-2002
LTL Lithuania, Litas                           1 EUR = 3.45280 LTL                        15-Jan-2015
LUF Luxembourg, Franc                   1 EUR = 40.3399 LUF                       28-Feb-2002
LVL Latvia, Lats                                1 EUR = 0.70280 LVL                        15-Jan-2014
MTL Malta, Lira                                 1 EUR = 0.42930 MTL                      31-Jan-2008
NLG Netherlands, Guilder (Florin)     1 EUR = 2.20371 NLG                     28-Jan-2008
PTE Portugal, Escudo                       1 EUR = 200.482 PTE                     28-Feb-2002
SIT Slovenia, Tolar                            1 EUR = 239.640 SIT                       14-Jan-2007
SKK Slovakia, Koruna                       1 EUR = 30.1260 SKK                     17-Jan-2009

YuanPay supports the above obsolete currencies; to make a conversion, type the name of the currency in the search box. Some old currencies are still physically convertible at special locations. For details, refer to the official ECB site listed in the Relevant Links section below.
Spelling and Capitalization
The official spelling of the EUR currency unit is “euro”, with a lower case “e”; however, the common industry practice is to spell it “Euro”, with a capital “E”. Many languages have different official spellings for the Euro, which also may or may not coincide with general use. Additionally, there are various nicknames for the currency including, Ege (Finnish), Pavo (Spanish), and Euráče (Slovak).

Relevant Links
For more information on the EUR, we encourage you to visit the links below, particularly the European Central Bank. These sites include recent news on the Euro as well as issues like implementation, spelling, legislation, and more.

AUD – Australian Dollar

Australia, Dollar
The Australian Dollar is the currency of Australia. Our currency rankings show that the most popular Australia Dollar exchange rate is the USD to AUD rate. The currency code for Dollars is AUD, and the currency symbol is $. Below, you’ll find Australian Dollar rates and a currency converter.

Currency Facts

AUD Stats
Name: Australian Dollar
Symbol: $ Cent: c
Minor Unit:
1/100 = Cent
Central Bank Rate: 1.50
Top AUD Conversion:
USD/AUD

AUD Profile
Inflation: 2.00%
Nicknames: Buck, Dough
Coins:
Freq Used: $1, $2, 5c, 10c, 20c, 50c
Banknotes:
Freq Used: $5, $10, $20, $50, $100
Central Bank:
Reserve Bank of Australia
Website: https://www.rba.gov.au/

Australian Dollar History
Importance of the Australian Dollar
The central bank in Australia is called the Reserve Bank of Australia. As the 5th most traded currency in the world, the Australian dollar is also referred to as buck, dough, or the Aussie. The Australian Dollar is known as a commodity currency due to its substantial raw material exports. As a result, the AUD is affected by China and other Asian import markets. Due to its relatively high interest rates, the Australian Dollar is often used in carry trades with the Japanese Yen. A carry trade is a strategy in which a currency with low interest rate is sold in order to buy a currency with a higher interest rate.

Early Currency in Australia
When New South Wales was first established in 1788 the English Pound was the official currency, although Spanish Dollars were used quite regularly. In 1813, to try to discourage the illegal use of Spanish Dollars, the centers of the coins were cut out; they became known as ‘holey dollars’ and the cores were called ‘dumps’; this was Australia’s first form of coinage.

From the Pound Sterling to the Australian Dollar
In 1825, the government imposed the Sterling standard and British coins began to be minted in Australia. These silver and bronze coins continued to be used until 1910, when a new national currency, the Australian Pound, was introduced. The Australian Pound was fixed in value to the Pound Sterling and, as a result, used a gold standard. Three years later, the first series of Australian notes were issued. In February of 1966, the Australian Dollar (AUD) was introduced under a decimalized system; dollars and cents replacing the pounds, shillings, and pence. In 1988, banknotes were converted to polymer, a technology originally developed in Australia to help prevent counterfeiting.

CNY – Chinese Yuan Renminbi

China, Yuan Renminbi
The Chinese Yuan Renminbi is the currency of China. Our currency rankings show that the most popular China Yuan Renminbi exchange rate is the CNY to USD rate. The currency code for Yuan Renminbi is CNY, and the currency symbol is ¥.

Currency Facts

CNY Stats
Name: Chinese Yuan Renminbi
Symbol: ¥ Jiao: 角
Minor Unit:
1/10 = Jiao
Top CNY Conversion:
CNY/USD
Top CNY Chart:
CNY/USD Chart

CNY Profile
Inflation: 1.60%
Nicknames: kuài, Mao
Coins:
Freq Used: ¥1, 5角, 1角
Banknotes:
Freq Used: ¥5, ¥10, ¥20, ¥50, ¥100, ¥1
Rarely Used: ¥2, 2角, 5角, 1角
Central Bank:
People’s Bank of China
Website: http://www.pbc.gov.cn/

Chinese Yuan Renminbi History

Early Currency in China
With a history of over 3000 years, Chinese currency existed in both Ancient and Imperial China. In 1914, the Silver Dollar was established as the official currency of the Republic of China, with copper, fen, and nickel coins being added in the 1930s. During this time silver appreciated in value, and China could no longer retain the silver standard. In 1935, a new currency known as Fǎbì, was issued.

Introduction of the Gold Yuan and Chinese Yuan Renminbi
The Gold Yuan replaced the Fǎbì in 1948 at a rate of 1 Gold Yuan to 3 million Yuan Fǎbì. That same year, the Yuan Renminbi (often called RMB) was introduced as a way to help stabilize the Communist held areas of mainland China. In 1955, a re-evaluation took place and a new Yuan Renminbi was introduced at a rate of 1 new Yuan to 10,000 old Yuan.

The Renminbi in Foreign Exchange
During the command economy, the Chinese Yuan Renminbi was set to unrealistic exchange values and as a result, severe currency guidelines were put in place. When China’s economy opened in 1978, the Yuan Renminbi was only used domestically and foreigners used exchange certificates; this led to a powerful black market. From 1997 to 2005, the Chinese government pegged the Chinese Yuan Renminbi to the US Dollar at approximately 8.3 CNY to 1 USD. In 2005, a flexible mechanism of exchange rates was phased in, with the RMB being re-evaluated to 8.1 Renminbi per US dollar. The Chinese government launched a pilot program in 2009, allowing some businesses in Guangdong and Shanghai to execute business and trade transactions with counterparties in Hong Kong, Macau, and select nations. The program has since expanded to all areas of China and all international counterparties. China has also made agreements with Australia, Japan, Thailand, Russia, and Vietnam to allow for direct currency trade, instead of converting to the US Dollar. As a managed float, the Renminbi’s value is determined by a basket of foreign currencies.

What is a SWIFT Code?

Banks usually offered international transaction through The Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT does not facilitate funds transfer: rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other.

SWIFT payments usually take 2-5 working days to reach their destination, however it is possible that they can take longer due to identity confirmation processes which varies across the countries and time differences.

Wechat Pay & AliPay

WeChat Pay is a payment feature integrated into the WeChat app, users can complete payment quickly with smartphones. WeChat has Quick Pay, QR Code Payments, In-App Web-Based Payments, and Native In-App Payments, all to fulfil the full range of scenarios your customers expect to fulfill different payment situation. Combined with WeChat official accounts, WeChat Pay service explores and optimizes o2o consumption experience, provides professional internet solutions for physical business. It is the best choice of mobile payments.

Alipay is a third-party mobile and online payment platform, established in Hangzhou, China in February 2004 by Alibaba Group. Alipay overtook PayPal as the world’s largest mobile payment platform in 2013. In the fourth quarter of 2016, Alipay had a 54% share of China’s US$5.5 trillion mobile payment market, by far the largest in the world.

What is a Central Bank?

A central bank or monetary authority is a monopolized and often nationalized institution given privileged control over the production and distribution of money and credit. In modern economies, the central bank is usually responsible for the formulation of monetary policy and the regulation of member banks.

The Central Bank for Australia is Reserve Bank of Australia.

What is Monetary Policy?

Monetary policy is the macroeconomic policy laid down by the central bank. It involves management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity.

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In determining monetary policy, the Bank has a duty to maintain price stability, full employment, and the economic prosperity and welfare of the Australian people. To achieve these statutory objectives, the Bank has an ‘inflation target’ and seeks to keep consumer price inflation in the economy to 2–3 per cent, on average, over the medium term. Controlling inflation preserves the value of money and encourages strong and sustainable growth in the economy over the longer.

The Reserve Bank uses its domestic market operations (sometimes called ‘open market operations’) to keep the cash rate as close as possible to the target set by the Board, by managing the supply of funds available to banks in the money market. The cash rate is determined in the money market as a result of the interaction of demand for and supply of overnight funds. The Reserve Bank’s ability to pursue successfully a target for the cash rate stems from its control over the supply of funds which banks use to settle transactions among themselves. These are called exchange settlement funds, after the accounts at the Reserve Bank in which banks hold these funds.

 

All money is a matter of belief.

Adam Smith

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