What is the difference between the foreign exchange market and the currency market?

The money market is a short-term capital market, which refers to the financial market with a financing period of less than one year, and is an important part of the financial market. Because the financial instruments contained in the market, mainly short-term credit instruments issued by banks and industrial and commercial enterprises, have the characteristics of short term, strong liquidity and low risk, and are placed after cash money and deposit money in the hierarchy of monetary amounts, which is called "quasi-money", so the market is called "money market".

In the world, due to economic exchanges such as investment, tourism, etc., there will inevitably be a relationship between monetary revenue and expenditure. However, the monetary systems of different countries are different, and if you want to pay abroad, you must first buy foreign currency in your own currency; On the other hand, foreign currency payment vouchers received from abroad must also be converted into the currency of the home country in order to circulate in the country. In this way, the problem of the exchange of the national currency with foreign currencies arises.

The comparison of the currencies of two countries is called the exchange rate or exchange rate. In order to implement foreign exchange policies and affect foreign exchange rates, banks in Western countries often buy and sell foreign exchange. All commercial banks, banks specializing in foreign exchange business, foreign exchange brokers, importers and exporters, as well as their foreign exchange market suppliers and demanders, all operate a variety of spot exchange transactions and futures transactions.

All these foreign exchange operations make up a country's foreign exchange market.

Compared with the foreign exchange market, the risk is high and the return is high, the money market is low risk and low return, foreign exchange is the currency of various countries, and the currency market includes the interbank lending market, the first repurchase market, etc., which is conducive to the improvement of the business level of commercial banks and the realization of the goal of profit maximization.

Foreign exchange refers to the exchange of currencies between countries.

The exchange rate and the spread generated during the exchange process.

The money market refers to the act of collecting and hedging auctions.

Many newcomers to the forex market will combine the foreign exchange market with the currency market.

Confused. In fact, the foreign exchange market and the currency market are two different ideas, and the roles of the two are also different. The foreign exchange market refers to the international trading of foreign exchange.

A trading venue that regulates the supply and demand of foreign exchange. Its function is to deal in monetary commodities, i.e., the currencies of different countries. The money market refers to the trading of financial assets with a maturity of less than one year.

market. Huichacha makes a simple summary of the difference between the two:

1. The market functions are different

Foreign exchange market: The function of the foreign exchange market is to realize the exchange of currencies and prevent the risk of exchange rate fluctuations.

Money market: The function of the money market is to finance surpluses and shortages of short-term funds.

2. The type of currency used is different

Forex market: In the forex market, forex trading inevitably involves two currencies, such as the US dollar.

against the Japanese yen. In other words, the forex market is where various currencies are exchanged for each other.

Money market: In the money market, the lending business usually involves only one currency, and the borrower and lender use the same currency.

3. There are different ways to make profits from banks

Foreign exchange market: In the foreign exchange market, the profit of a bank in the foreign exchange business comes from the difference in the exchange rate between buying and selling foreign exchange. The part of the selling price that is higher than the buying price is the operating profit of the bank.

Money market: In the money market, the profit of a bank's short-term capital deposit and loan business is derived from the deposit and loan interest rate.

differences. The interest rate on loans is higher than the interest rate on deposits.

part of the bank's operating profit.

4. Essential differences

Forex market: The forex market is a place or trading network for forex trading.

Money market: The money market refers to the short-term capital lending market with a maturity of no more than one year, and is an integral part of the international capital market.

5. The business composition is different

Foreign exchange market: The foreign exchange market consists of a spot trading market, a forward trading market, and a correction trading market.

Money Market: The money market consists of three parts: the bank short-term credit market, the short-term** market, and the discount market.

First of all: the forex market is not a currency market.

The foreign exchange market is a trading network or place where foreign exchange is bought and sold. Its main function is to operate currency commodities, that is, the currencies of different countries, at the same time, it is also an important part of the financial market, with the characteristics of having a market without a market, low game transaction costs, 24-hour trading, large trading volume, two-way trading, etc.

The money market is a market for short-term fundsIt refers to the financial market composed of financial investment of less than one year, and is also an important part of the financial market, in general, the money market includes short-term local bonds, short-term treasury bonds, short-term negotiable certificates of deposit and commercial papers, etc., but it does not include commodities and financial derivatives with a duration of less than one year, and at the same time in the currency market, it has the characteristics of short trading period, high liquidity and low risk.

1. The business composition of the two markets is differentThe foreign exchange market is composed of the forward market, the spot market and the adjustment market, while the currency market is composed of three parts: the short-term market, the short-term credit market and the discount market.

2. From the perspective of currency typesThere are also big differences. There are two main currencies in the foreign exchange market, and the currency market generally involves one currency.

3. Market function. The function of the currency market is only to finance the shortage of short-term funds, while the function of the foreign exchange market can realize the exchange of currencies and prevent the risks arising from currency changes.

4. The profits obtained by banks are also differentIn the foreign exchange market, the profit of the bank's foreign exchange business is the exchange rate difference between buying and selling foreign exchange, and if the sale is greater than the purchase, then it is the bank's operating profit; In the money market, when banks carry out short-term fund deposit and loan business, the profits obtained are mainly the difference between deposit and loan interest rates, and if the loan interest rate is higher than the deposit interest rate, this part is the bank's operating profit.

The difference is that foreign exchange includes ownership certificates such as **, while local currency generally refers to the domestic currency and does not include financial assets such as ownership certificates and debt certificates. Foreign exchange as a currency, and the local currency are both proof of creditor's rights and debts.

Extended information: Foreign currency, English name is foreign currency, which is a creditor's right that can be used in the event of a balance of payments deficit held by the monetary administration in the form of bank deposits, treasury bills of the Ministry of Finance, long-term and short-term bonds.

General classification: according to the degree of restriction: it is divided into freely convertible foreign exchange, limited free convertible foreign exchange and bookkeeping foreign exchange.

Freely convertible foreign exchange is the foreign exchange that is most used in international settlement, can be freely bought and sold in the international financial market, can be used to pay off claims and debts in international finance, and can be freely exchanged for the currencies of other countries. For example, US dollars, Hong Kong dollars, Canadian dollars, etc.

Limited free convertibility of foreign exchange refers to foreign exchange that cannot be freely converted into other currencies or paid to a third country without the approval of the currency issuing country. The International Monetary Organization (IMO) stipulates that currencies that have certain restrictions on payments and transfers of funds of an international nature are limited freely convertible currencies. More than half of the world's national currencies are limited freely convertible currencies, including the renminbi.

Book-entry foreign exchange, also known as clearing foreign exchange or bilateral foreign exchange, refers to foreign exchange recorded in the bank accounts designated by both parties, which cannot be converted into other currencies and cannot be paid to third countries.

Foreign exchange, also known as physical foreign exchange, refers to foreign exchange that is used for import and export, that is, an international means of payment formed due to the international circulation of commodities.

Non-foreign exchange refers to all foreign exchange other than foreign exchange, that is, all foreign exchange that is not used for import and export, such as foreign exchange for labor services, remittances and donated foreign exchange.

Financial foreign exchange is different from foreign exchange and non-foreign exchange, which is a kind of financial asset foreign exchange, such as foreign exchange traded between banks, which is neither tangible or intangible, nor used for tangible, but for the management and arrangement of various currency positions.

According to market trends: it is divided into hard foreign exchange and soft foreign exchange, or strong currency and weak currency.

The foreign exchange market and the currency market are closely linked and often interact with each other in capital flows. The foreign exchange market refers to the trading market between various currencies, while the money market refers to the short-term lending market, which is usually used for short-term fund allocation such as ** and financial institutions.

In the foreign exchange market and the currency market, supply and demand are the key factors that determine equilibrium**. The value of a currency is affected by the demand of buyers and sellers, as well as the amount of money. When the demand exceeds **, the monetary value**; When the value of the currency is greater than the demand, the value of the currency is cautious.

In the foreign exchange market, currency exchange rates are influenced by a variety of factors, including international**, financial, political, and economic factors. If there is a change in a country's business activities or capital market, it will have an impact on the supply and demand of that country's currency and the exchange rate. For example, if the country's surplus increases, the demand for the renminbi may increase, which will drive the renminbi to appreciate.

In the money market, the supply of money and the interest rate are two crucial factors. If the central bank raises interest rates, the amount of money shrinks, making money more scarce and precious. This will also cause the value of the currency to rise, which will have an impact on the forex market.

In short, in the foreign exchange market and the currency market, factors such as supply and demand, economic fundamentals and other factors will affect the equilibrium and change of currency.

The difference between foreign currency and foreign exchange lies mainly in the following two aspects:

1. The concept is different.

Foreign exchange refers to the creditor's rights that can be used in the form of bank deposits, treasury bills of the Ministry of Finance, long-term and short-term ****, etc., when there is a deficit in the balance of payments. To put it simply, it refers to all assets owned by a country in foreign currencies and various means of payment that can be used for international settlement of claims and debts.

Foreign currency, on the other hand, refers to all foreign currencies other than domestic currency.

2. Different uses.

The main uses of foreign exchange are: payment means and credit instruments for international ** and clearing; It can be used to adjust the surplus and shortage of international funds; It can serve as an important international reserve resource for a country.

The main use of foreign currency is for the payment of goods and currency exchange.

1.Essentially, the foreign exchange market is a place or trading network for foreign exchange trading; The money market refers to the short-term capital lending market with a maturity of one year or less, and is an integral part of the international capital market. 2.

The business composition of the two markets is different The foreign exchange market consists of a spot market, a forward market, and a correction market. The money market is composed of three parts: the bank short-term credit market, the short-term ** market and the discount market. 3.

From the perspective of the type of currency used in the foreign exchange market, a foreign exchange transaction must involve two currencies; In the money market, a loan business generally involves only one currency, and both the borrower and the borrower use the same currency. 4.From the perspective of market function, the function of the foreign exchange market is to realize the exchange of currency types and prevent the risk of exchange rate changes; The function of the money market is only to finance the surplus of short-term funds.

5.From the perspective of the way the bank obtains profits In the foreign exchange market, the profit of the bank's foreign exchange business is the difference between the exchange rate of buying and selling foreign exchange, and the part of the selling price greater than the first price is the bank's operating profit; In the money market, the profit of the bank from the short-term fund deposit and loan business is the difference between the deposit and loan interest rate, and the part of the loan interest rate that is higher than the deposit interest rate is the bank's operating profit.

The money market refers to the bond trading market within one year, mainly trading short-term bonds with high credit ratings.

The foreign exchange market refers to the international foreign exchange trading market, which is a currency.

The essential difference is that the foreign exchange market is relatively large and belongs to a broad sense. The other is a narrow term.