Börsenlexikon: Foreign exchange
Foreign exchange refers to claims denominated in other currencies in an official area of circulation of a currency. These include:
- Foreign accounts and securities
- Domestic accounts held in foreign currency - Foreign currency accounts
- Foreign cash is correctly called foreign notes and coins, but occasionally this is also referred to as foreign exchange.
Foreign exchange is often used as a store of value when neither the value of official cash nor the value of claims denominated in the official currency is considered to be approximately constant in the future. This effect thus occurs when inflation is expected to be high.