GLOSSARY

Foreign exchange

Foreign exchange definition

Foreign exchange (FX) is the global market for exchanging one currency for another. It enables international trade, investment, and travel by converting currencies through real-time exchange rates.

How it works

FX transactions typically occur in two forms:

A spot contract is the immediate exchange of currencies at the current market rate, known as the spot rate, with settlement in two business days.
A forward contract locks in an exchange rate for a future transaction, helping businesses hedge against currency fluctuations.

Traders use tools like limit orders to buy or sell currencies only at a specific price, while market pricing includes a bid–ask spread – the difference between buy and sell quotes. Price changes are measured in pips, and many participants use leverage to increase their exposure with a smaller capital base.

Why it matters

Foreign exchange is essential for global commerce and financial stability. Understanding tools like forward contracts, limit orders, and exchange rates helps individuals and businesses manage currency risk and operate across borders more efficiently.

Good to know for SMEs

For internationally active SMEs, foreign exchange is a strategic concern. Currency fluctuations can quickly impact pricing, costs, and revenues. By using tools like forward contracts and limit orders, SMEs can manage risk, protect margins, and plan with confidence – turning FX volatility into a competitive advantage.

Smart foreign exchange for growing businesses

With amnis, you can access a 24/7 self-service platform backed by local support. Benefit from transparent rates and manage over 20 currencies with the amnis multi-currency card — all with 0% FX margin and no transaction fees in over 180 countries.

Enjoy seamless international payments, real-time control, and the best rates.

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Currency

A currency is a commonly accepted form of payment, typically issued by a government and used within its region. It serves as the physical representation of money, facilitating trade and financial transactions.

Currency exchange

Currency exchange is the process of converting one country’s currency into another, enabling international activities such as travel, trade, and investment. This can take place at physical locations like banks and exchange offices, or through digital platforms. Exchange rates fluctuate based on factors like market demand, economic indicators, and geopolitical events.

Key currency

A key currency is a stable and widely used currency in international trade and finance that serves as a benchmark for global transactions. It is often held as a reserve by central banks and used for pricing commodities, foreign exchange, and cross-border payments. The British pound, U.S. dollar, euro, and yen are widely considered key currencies.

Prime rate

The prime rate is the interest rate that commercial banks charge their most creditworthy customers, often large corporations. From a currency perspective, it reflects the cost of borrowing in a particular currency and serves as a key indicator of monetary policy. Changes in a country’s prime rate can influence capital flows, foreign exchange rates, and the overall strength or weakness of that currency in global markets.

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About amnis

amnis offers a comprehensive platform for international banking, offering a range of tools in one place. Transfer money abroad, exchange currencies 24/7 and collect international money transfer with your own IBAN accounts supporting 20+ currencies. Founded in 2014 in Zurich, amnis is a regulated payment institution under the supervision of the Banking Supervision Section in Liechtenstein (FMA) within the EEA.

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