International Monetary System and Financial Environment
The international monetary system refers to the financial environment system which includes financial institutions, multinational corporations and investors.
The international monetary system provides a framework for determining the rules and procedures for international payments, exchange rates, and capital flows.
An international financial environment refers to the conditions of activity in the economy or financial markets all over the world.
When most people think of international trade, most think of only products (products or services) in imports and exports. But markets for foreign exchange and capital are equivalent to trade in product and service.
Firms regularly trade the US Dollar, Euro, INR, NPR or other major currencies to achieve their international business goals.
Currency
Currency is a medium for the exchange of goods and services (for trade). In simple terms, currency is money in the form of paper or coins, issued by a government's authorised body and use as a mode of payment and accepted at its face value.
Foreign Currency (Which currency is known as an international currency? )
In the foreign exchange market, international trade, and in terms of international finance an International currency or supranational currency, is a currency that is traded and use as a medium for international trade, with no border barriers.
A foreign currency is a currency that belongs to other foreign countries.
| Rank | Country | Currency |
|---|---|---|
| 1 | United States of America | United States Dollar |
| 2 | European Union | Euro |
| 3 | United Kingdom | Pound Sterling |
| 4 | Japan | Japanese Yen |
Foreign Exchange (forex or FX) is the trading of one countries currency for the exchange of another countries currency.
For example, we can exchange Nepali Rupees 119.31 with the US $ 1.
Exchange Rate System
An exchange rate system establishes the manner in which the exchange rate is determined with the value of the domestic currency and other currencies.
In simple terms, the exchange rate system refers to the system that determines the exchange rate between domestic currency and foreign currencies.
Exchange rates are decided by demand and supply. However, governments and their authorized agencies (such as the Central or Reserve Bank) can influence those exchange rates in various ways.
There are different types of exchange rate systems.
1. Floating exchange rate system
a. Free-floating exchange rate system,
b. Managed floating exchange rate system
2. Fixed exchange rate system
3. Controlled Exchange Rate System
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1. Floating exchange rate system
| Country | Currency | Peg (on 11/19/19) | Currency |
|---|---|---|---|
| Aruba | Florin | 1.79 | U.S. dollar |
| Bahamas | Dollar | 1.00 | U.S. dollar |
| Bahrain | Dinar | 0.38 | U.S. dollar |
| Barbados | Dollar | 2.00 | U.S. dollar |
| Bosnia and Herzegovina | Mark | 1.96 | Euro |
| Bhutan | Ngultrum | 1.00 | Indian rupee |
| Brunei | Dollar | 1.00 | Singapore dollar |
| Bulgaria | Lev | 1.96 | Euro |
| Comoros | Franc | 491.97 | Euro |
| Curacao and Sint Maarten | Ang | 1.79 | U.S. dollar |
| Denmark | Krone | 7.47 | Euro |
| Dijibouti | Franc | 177.78 | U.S. dollar |
| Eritrea | Nakfa | 15.00 | U.S. dollar |
| Hong Kong | Dollar | 7.83 | U.S. dollar |
| Iraq | Dinar | 1,192.11 | U.S. dollar |
| Jordan | Dinar | 0.71 | U.S. dollar |
| Lebanon | Pound | 1,507.50 | U.S. dollar |
| Lesotho | Loti | 1.00 | S.A. rand |
| Namibia | Dollar | 1.00 | S.A. rand |
| Nepal | Rupee | 1.61 | Indian rupee |
| Oman | Rial | 0.38 | U.S. dollar |
| Qatar | Riyal | 3.64 | U.S. dollar |
| Sao Tome and Principe | Dobra | 24.56 | Euro |
| Saudi Arabia | Riyal | 3.75 | U.S. dollar |
| Turkmenistan | New Manat | 3.50 | U.S. dollar |
| UAE | Dirham | 3.67 | U.S. dollar |
- Foreign Exchange Market System
- Currency Exchange Control System
- Commercial Banking System
