1-1b. What exactly does “foreign exchange” mean?

The exchange (buying and selling) of one currency for another is known as "forex." In interactions with foreign countries, a company swaps sales received in foreign currency for foreign currency, and conversely, while paying the purchase price in foreign currency, a company exchanges domestic currency for foreign currency. As an example, consider the following.

Rather than directly exchanging the currency, "foreign exchange" refers to a method of making payments using credit means such as bills of exchange and remittance checks, but foreign currency exchange services at banks and airports, among other places. In a broad sense, exchanging your currency for foreign currency using the methods described above is also akin to "foreign exchange."