Generally speaking, it refers to foreign currency or various means of payment expressed in foreign currency for international settlement of claims and debts.
Dynamic meaning: the transaction process in which one country is converted into the currency of another country and remitted to another country using international credit instruments in order to pay off the creditor’s and debt relationship formed by economic and trade exchanges between two countries.
Foreign exchange is a means of payment expressed in foreign currency for international settlement.
This means of payment includes credit instruments and securities expressed in foreign currency, such as bank deposits, commercial bills, bank drafts, bank checks, foreign government Treasury bills and long-term and short-term securities, etc.
The IMF defines foreign exchange as: “Foreign exchange is the creditor’s right held by the monetary authority in the form of bank deposits, Treasury bills, long-term and short-term government securities, etc., which can be used at a time.”