Financial Management: Core Concepts, Third Edition

18.2 Foreign Exchange

Each country around the world issues currency for use in economic transactions.

In England, the currency is the pound sterling (symbol £); in Japan, the yen (¥); in Mexico, the peso; and so on. Nearly every country around the world has its own currency. The exception is the euro (€), a currency that presently eighteen members of the European Union (EU) use, as do six nonparticipating members of the EU. Nine EU members (most notably, the United Kingdom, Sweden, and Denmark) continue to use their own currencies. Introduced in 1999, the euro is now the second-most-traded currency in the world, behind the U.S. dollar. As any world traveler knows, when you go from one country to another, you need to exchange your current currency ...