What is foreign exchange settlement? Why do we need to settle foreign exchange? The income earned by companies or individuals is not only renminbi, but also the currencies of many countries such as the US dollar and Japanese yen. However, foreign currencies cannot be used in our country and need to be converted into renminbi in banks. Therefore, At this time, some people make money by speculating on foreign exchange. If there is no control over speculation on foreign exchange, the exchange rate of Renminbi will have a great impact, causing the depreciation of the renminbi in the market and seriously affecting the national economy. So let’s analyze it next, what is foreign exchange settlement? Why do you want to settle the relevant content.

  1. What is foreign exchange settlement

Analysis in an easy-to-understand way. For example, for a company, the foreign exchange settlement is the foreign currency that the company earns in other countries or the income earned by cooperating with foreign companies at work, or the company or individual exchanges foreign currency based on the exchange rate. The settlement of purchased foreign exchange and sold foreign exchange requires settlement in the bank and the use of RMB is called foreign exchange settlement. However, foreign exchange settlement can be divided into three forms.

The first is the compulsory foreign exchange settlement. The so-called compulsory foreign exchange settlement means that all the foreign exchange income of the enterprise or individual must be sold to the foreign exchange designated bank without reservation. It is called compulsory foreign exchange settlement if you cannot establish your own account to retain foreign exchange income.

The second is willingness to settle foreign exchange. Intentional foreign exchange settlement is not enforced like compulsory foreign exchange settlement. The foreign exchange owner of the enterprise or individual can decide whether or not to settle foreign exchange, and the foreign exchange owner can sell part of the foreign exchange income to foreign exchange according to his own wishes. The designated bank of the country can also open a foreign exchange account to keep it. In short, the willingness to settle foreign exchange is the owner of the foreign exchange income, which is determined by the owner of the foreign exchange income.

The third type is quota settlement, which means that foreign exchange income can be kept without settlement within the amount approved by the state, but if it exceeds the amount approved by the state, the excess foreign exchange income must be settled.

  1. Why do we need to settle foreign exchange

The purpose of foreign exchange settlement is to stabilize the exchange rate and prevent domestic currency speculation. When the amount of foreign exchange exceeds the national currency, the supply on the international market will increase, and there will be a risk of devaluation for the national currency, which will affect the international market. The stability of the exchange rate will cause more people to engage in foreign exchange speculation in this way, thus restricting the reasons why owners of foreign exchange income need to settle foreign exchange.

What is foreign exchange settlement now? Do you have some understanding of why you need to settle foreign exchange? In order to limit various measures that are not conducive to the country’s economic development and disturb the stability of the exchange rate, the country has imposed a restrictive sanction to maintain the stability of the country’s economy and maintain the stability of the exchange rate. In addition, there are more content about financial current affairs waiting for you to understand.