A currency is an entity by which exchange of services and goods is accomplished. I t is a type of wealth. Money is an intermediate of replace. Every country (also called currency zone) has its own specific currency which is an intermediate of replace. There are rates of exchange to trade between two exchange regions.

Exchange rate is a price at which currency of two currency zones are exchanged.

Currencies are of many types like fixed currency, floating currency, local currency, modern currency, global currency, privately issued currency etc. However, currency that is used in foreign exchange is of two types and these are:-

Floating currencies :

A floating currency is that which follows the floating exchange rates and exchange rate regime. Exchange rate regime is a method to control its currency with respect to other foreign currencies.

Fixed currencies

It is also called pegged currency. Fixed currency is that type of currency whose value is matched to the value of another single currency or a group of currencies to measure a value of any thing like gold. Fixed currency is a complementary of floating currency. Most of the fixed currency rates are pegged to U.S. dolor and the Euro.

Some Facts

Most of the countries have monopoly control over the supply and production of its own currency. One exception to the European Monetary union is that it is controlled by the European central bank. Those countries which do not have a control over its currency production, in that case central bank or a ministry of finance keep a control.
Each currency has single partial currency. Frequently, it is valued 1/100 of main currency. For example, 100 cents is equal to 1 dollar, 100 pence is equivalent to 1pound, 100 centimes is equal to 1 franc, 100 paisa is equal to 1 rupee etc.
There are some countries which don’t use decimal system. Like Madagascar and Mauritania divide their currency into 5 parts. Mauritania ’s ouguiya is separated into five khoum and Madagascan ariary is separated into five iraimbilanja.

There are about 194 countries which have their own currency.

Foreign Exchange Controls

A foreign exchange keeps a watch over various forms of controls that are imposed by the government on the sailing and purchasing of foreign currencies by the residents.

Common foreign exchange controls are:

Can ban the use of foreign currency within country
Can ban locals to use foreign currency
Can restrict currency exchange
Fix the exchange rates