International economic relations involve interaction between legal entities and individuals of different states. These relations in one way or another are associated with operations in the foreign exchange market. As a rule, on the territory of a certain country, the exchange of one currency for another is under some control of the Central Bank of that state.
Currency exchange refers to those operations of commercial banks that are directly related to the exchange of one currency for another. Another name for this type of operation is conversion operations, or currency conversion. Such an exchange is carried out through the conclusion of transactions for the purchase and sale of the currency of one state for the currency of another state.
In the most general legal sense, conversion (currency exchange) operations are transactions between equal participants in the foreign exchange market, in the course of which pre-agreed amounts, expressed in monetary units of one country, are exchanged for the currency of another country; transactions are conducted at a pre-agreed rate.
Conversion operations are fundamentally different from credit and deposit operations in that the former are carried out at a certain point in time, that is, they do not have a time duration. But credit and deposit operations have different urgency, they are long in time.
The delivery of funds for conversion transactions can be carried out either immediately or after a specified period. In the first case, delivery takes place no later than the second banking day, if counted from the moment of the transaction. Different periods of money supply make it possible to distinguish spot operations and urgent operations, which are carried out mainly with non-cash currency.
Experts call the international market of currency exchange (conversion) operations the spot market. The rules adopted in this market segment provide convenience for the participants in the transaction, since in the two days allotted for the conversion operations, it is possible to process financial information and prepare the payment orders necessary for making transfers.
Forward (that is, forward) foreign exchange transactions differ from spot ones in that they are concluded on one day, but the execution of contracts on them is postponed for some time in the future.
In the domestic market of the Russian Federation, transactions on the purchase and sale of foreign currency are carried out between authorized banks, which have a special license from the Central Bank of the Russian Federation, and bank customers, as well as between the banks themselves (through currency exchanges or on the over-the-counter market).
The Central Bank of the country exercises control over the currency market and over operations that are in one way or another related to currency within Russia. For these purposes, he has the right to apply administrative measures. These include: preparation and publication of regulatory documents that determine the procedure for performing basic operations with foreign currency; bank accounting of such transactions; development of a procedure for minimizing risks; timely tracking of limits on open currency positions of controlled banks.
Another administrative method for regulating the country's foreign exchange market may be the establishment by the Bank of Russia of the maximum possible deviation limit for the rates that determine the purchase and sale of foreign currency.
The Central Bank has not only administrative, but also no less effective market instruments of active influence on the foreign exchange market. These include foreign exchange intervention; this is the name for the Bank of Russia operations involving the purchase or sale of currency on the Moscow Interbank Currency Exchange (MICEX). These well-thought-out and planned operations are capable of influencing the exchange rate of the domestic currency, the demand and supply of cash.
One of the additional functions of the Central Bank is to establish restrictions in the form of the share of foreign exchange earnings that is subject to mandatory sale in transactions on the MICEX. This measure makes it possible to replenish the country's gold and foreign exchange reserves and maintain the supply of foreign currency at the required level.
The list of the simplest foreign exchange transactions that commercial banks offer to a wide range of their clients, as a rule, includes:
- purchase and sale of foreign currency in cash from other countries for the cash currency of the Russian Federation;
- sale of one type of foreign currency for another foreign currency (conversion);
- purchase of currency (banknotes of a foreign state) with traces of damage;
- acceptance of banknotes that raise any doubts about their authenticity.
