Agio
Encyclopedia
Agio is a term used in commerce
for exchange rate
, discount
or premium
.
, the standard coin
was kept up to a uniform point of fineness. In particular, a freshly minted English sovereign was in a fixed relation to freshly minted coins of other countries: 1 ₤
= 25.221 francs = 20.429 marks = US$4.867, etc.
This rate, known as the mint par of exchange, did not necessarily coincide with the corresponding market exchange rates. The balance of trade
between the countries determined the actual rate of exchange. If England has a negative balance of trade with France, for instance, currency of equal magnitude is remitted to France, which thus creates a demand for French currency. Procurement of that currency involves payment of a premium referred to as agio. it's refers to exchange rate.
. An Agio was sometimes allowed for payment in the more convenient form of gold or where the value paper currency of a country fell below the bullion which it professed to represent.
Commerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
for exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
, discount
Discounts and allowances
Discounts and allowances are reductions to a basic price of goods or services.They can occur anywhere in the distribution channel, modifying either the manufacturer's list price , the retail price , or the list price Discounts and allowances are reductions to a basic price of goods or services.They...
or premium
Premium
Premium may refer to:* Premium , a promotional item that can be received for a small fee when redeeming proofs of purchase that come with or on retail products....
.
Exchange rate
The variations from fixed par values or rates of exchange in the currencies of different countries. For example, in most countries that used the gold standardGold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
, the standard coin
Coin
A coin is a piece of hard material that is standardized in weight, is produced in large quantities in order to facilitate trade, and primarily can be used as a legal tender token for commerce in the designated country, region, or territory....
was kept up to a uniform point of fineness. In particular, a freshly minted English sovereign was in a fixed relation to freshly minted coins of other countries: 1 ₤
Pound (currency)
The pound is a unit of currency in some nations. The term originated in England as the value of a pound of silver.The word pound is the English translation of the Latin word libra, which was the unit of account of the Roman Empire...
= 25.221 francs = 20.429 marks = US$4.867, etc.
This rate, known as the mint par of exchange, did not necessarily coincide with the corresponding market exchange rates. The balance of trade
Balance of trade
The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports...
between the countries determined the actual rate of exchange. If England has a negative balance of trade with France, for instance, currency of equal magnitude is remitted to France, which thus creates a demand for French currency. Procurement of that currency involves payment of a premium referred to as agio. it's refers to exchange rate.
Exchange rate differential
The term was also used to denote the difference in exchange between two currencies in the same country where silver coinage was the legal tenderLegal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
. An Agio was sometimes allowed for payment in the more convenient form of gold or where the value paper currency of a country fell below the bullion which it professed to represent.