Currencies can be used in any country, but they are usually unique. Barter was a way to exchange goods for goods. There was never a need for a currency. Currency was originally created in the form gold, stones, or cotton bales. Each currency is unique because the issue of currency is a sovereign right of any country. A currency's value is an indicator of its economic strength as well as its trade surplus. Countries with high trade surpluses are likely to have strong currencies.
There was not a market that allowed currency trading or futures trading for a long time. The rupee forward market was the only market for forex trading in India. This market was largely inter-bank. After the introduction of currency futures on stock exchanges like NSE or the BSE, India currency was popular among small- and medium-sized investors. The global currency trading volume is greater than $5 trillion, but India's currency market remains small.
Hard currencies are currencies that can be traded freely around the globe and are supported by strong national economies.
Examples of hard currencies include the US Dollar, Euro, Pound and Japanese Yen. They are widely accepted and can be traded.
Each country has its own currency. It is issued by its central bank. RBI for India, Federal Reserve in the USA, Bank of England for the UK, etc.
Only the Euro region uses the Euro as its currency. Large nations such as Germany, France and Spain have all abandoned their currencies and now use the Euro.
Understanding the base and quotation currencies is essential to understanding currency trading basics in India.
The rupee/dollar trade uses the USD as the base currency, and the INR as the quotation currency. When we write USD 1/INR, it becomes the base currency. = Rs.67. The USD is the base currency. The INR is the quotation currency. Rs.67 is its value. Base currency is always expressed as 1 unit.
Not necessarily. It is possible for any currency to be the base currency.
In Euro / Dollar trades for example, the Euro is usually the base currency while the US dollar is used as the quotation currency. Similar to the above, if we write INR 1 / Yen= 1.95, the INR becomes a base currency, and the Japanese Yen becomes a quotation currency with Yen 1.95.
If you believe the US dollar will strengthen against the INR, then you can purchase USD/INR futures. You can also sell USD/INR options if the INR appreciates. The margins for currency trading are also much lower than those of commodities or equity trading.
This is how currency trading works in India.