About Foreign Exchange
As you know, money is anything that is accepted as a medium of exchange. In most of the world, people accept pieces of paper imprinted with pictures of national heroes or local wonders of nature as money. But in each nation, they accept different pieces of paper.
This means that if someone in the United States wants to buy something from someone in, say, Mexico, she must first exchange her local currency—dollars—for the currency accepted in Mexico—pesos. This currency conversion occurs at an exchange rate.
Currency conversion is the procedure of changing one currency into another currency. The exchange rate ...