What is Xenocurrency? – InvestBro

report from Euro ChangeCurrently, 180 currencies are used in 190 countries around the world. Basically, these 190 countries issue official currencies. Official currency can only be used within the borders of the issuing country.

For example, Indonesian banks issue money called rupiah. Rupiah can only be used in Sabang to Merauke. Cannot be used in Timor Leste, Papua New Guinea or Malaysia, so if you want to travel to these neighboring countries You must exchange the Rupiah for the official currency at any money changer. and vice versa

However, coupled with the current high globalization There are now several currencies that can be used as a medium of exchange in several countries simultaneously in some contexts. This type of currency is called xenocurrency.

Understanding Xenocurrency

Xenocurrency is a currency that can be used as a medium of exchange outside the geographic boundaries or jurisdiction of the issuing country. Typically, xenocurrency is used as a means of payment for international trade. Another name for this term is foreign currency or forex or forex alias forex.

In linguistics, xenocurrency comes from the Greek “xeno” which means “foreign.” The term was first used by Fritz Machlup, president of the International Economic Association in 1974. However, due to the negative connotation of “xeno” in In English, foreign currency or forex phrases are therefore used more often than xenocurrency.

Currently, the term xenocurrency can be associated with two currencies: the euro and the cryptocurrency. The euro can be associated with this term as it is the official medium of exchange in the 19 sovereign countries that are members of the European Union. Digital currencies can also be associated with xenocurrency, as this new type of currency is generally not issued by any central bank and can be traded in several countries simultaneously.

Xenocurrency Trading Example

simple example Of daily foreign trade is when you go on a pilgrimage to the Holy Land. Instead of using Rupiah to buy various Hajj souvenirs. You will be asked to exchange your money for riyals first.

Another example is when your relative sends money from abroad to Indonesia as income to become an Indonesian worker. at a money transfer service provider such as a bank or postal service The money will be converted to Rupiah first based on the Rupiah exchange rate with the relevant currency.

In a slightly more complicated case Many world currencies, such as the dollar, yen, or euro, are widely used as a payment method when exporting and importing. you have to use yen or when you export goods to the United States You will be paid in US dollars.

In addition to real-world trading, xenocurrency can now be used as an investment and trading tool. Many banks in Indonesia provide investment deposits in the form of foreign exchange while trading or forex trading has become an authorized trading activity by BAPPEBTI.

Xenocurrency Trading and Investment Risks

Are you interested in trading and investing in xenocurrencies or not? Here are some risks and challenges:

• exchange rate change. Forex (another term for xenocurrency) is the most liquid trading tool in the world. which means The price changes in this tool can also be done very quickly. Not just daily Foreign exchange rates can change even in minutes and seconds.
• Transaction Fee Changes. In the world of Forex trading These transaction fees are known as transaction fees. spreadMany forex brokers charge this spread as a percentage of the transaction value (floating). The spread will also change. Not to mention the fact that spreads between one currency pair and another are also changing. In addition to the spread Forex brokers usually charge a commission. especially if the account is in an inactive state.
• Basic risk. In addition to factors related to forex demand and supplyThe price or exchange rate of one currency against another may change due to fundamental factors or support for the economy of the country concerned. These fundamental factors are, for example, the reference interest rate of the relevant country. Inflation rate, tax policy on social, political and economic stability of related countries. due to any economic condition The occurrence of a country will certainly affect the exchange rate of that country’s currency.

But the advantage is if you are successful in trading or investing using foreign currency. The profit you will get is also high. especially in the case of a weakening of Indonesia’s economy. Thus, the exchange rate of rupiah to the dollar has increased as it is today.