currency and foreign currency

currency and foreign currency
The open economy reality introduces two kinds of monetary units in transactions or exchange mechanism, namely, the domestic currency and foreign currency. The second is called foreign exchange. In addition to coins, notes and bank deposits denominated in foreign currency units, exchange usually involves a large number of highly liquid claims denominated in foreign currency units. In the Indian context, the exchange Regulation Act (Fera), 1973, foreign assets in foreign currency and includes -

All deposits, loans and deposits to be paid in any foreign currency, and all drafts, traveler's checks, letters of credit and promissory notes expressed or drawn in Indian currency but payable in foreign currency.

Any instrument payable, at the discretion of the drawee or the holder thereof or any other party thereto, whether in Indian currency or foreign currency or partly in one and partly in the other.

"The market in which national monetary units claim to be exchanged for foreign currency units are called the foreign exchange market."