For non-financials:

We send money in a chosen currency available to transfer from our present place of residence to the intended destination (home land for exp.), which under any special arrangements, reach to receiver's equivalent amount in local currency- under normal circumstances. Sending currency across boarder is called foreign remittance; sending those through official channel/declarations are better for the economy to get more capacity in trade, commerce, finance and economy as a whole as foreign reserve grows.

Technical Views:

As per my knowledge, as we know from regulatory point of view, due to varieties in currency convertibility regulations- current to capital accounts- varied country to country under international monetary mechanisms, foreign exchange policies, rules-there should not be one fit answer,in my options.

But in clean eye, a country's economy benefits from better foreign currency reserves in terms of being able to be more flexible and fragile to cope up with changes in trade deals and negotiations. Many of one aspect.

How policy distracts, as an opinion, for example, without special foreign currency provisions , in most developing countries, sending "money" from outside in "foreign currency" or the "national currency" - does mean nothing to "you" or "the receiver", as the receiver would ultimately get equivalently converted local currency.

The technical beauty of your deep afterthought behind the question goes much test and analysis in terms of nations and extents of impacts both ways.

You are here mentioning about "foreign remittances" and "economy" correlations and dependencies. Some studies showed : 1) "Foreign remittances" has positive effects as a major source of export earning in a "economy"

2) "Foreign remittances" huge reserve does not bring good to all dynamics economics (may cause huge opportunity loss for a nation for various economic-non economic factors ).

So, drawing a clear cut answer to your broader question is out of my limit here (as I afraid/ would prefer not to take a position without country level multi-layered studies without constructing bases).

My tried answer is based on:

01. National Account Analysis

02. BOP account analysis.

03. Theoretical academic research on International Finance flows and regulations with mechanisms.

04. Critical evaluation and evolution of International Monetary System in the modern economy under reforms: with the anticipated increased virtual currency domination (on-going).

05. Green Ring Project (An innovative learning by doing project by this writer).

Would be nice to learn and hear from you in future as the fin-tech has brought many other debating issues like centralization, decentralization impacts, SDGs etc. Warm regards, Shobhon

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Thank you very much. Wish the best for my Motherland and yours as well :)

Jazak Allahu Khaair :)

Dear Ahmed Hesham,

It is recommended sending money in foreign currency because this will affect foreign transfers as part of the Balance of Payment (BOP) process.

I recommend you focus your approach on the relationship between the Gross Domestic Product (GDP) and Balance of Payments (BOP), as the latter includes the effects of Foreign Exchange, detailed as follows:

The BOP Interaction with Key Macroeconomic Variables:

• A nation’s balance of payments interacts with nearly all of its key macroeconomic variables

• Interacts means that the BOP affects and is affected by such key macroeconomic factors as:

– Gross Domestic Product (GDP)

– The exchange rate

– Interest rates

– Inflation rates

The BOP and GDP:

• In a static (accounting) sense, a nation’s GDP can be represented by the following equation:

GDP = C + I + G + X – M

• The variables from the above formula are defined as:

C = consumption spending

I = capital investment spending

G = government spending

X = exports of goods and services

M = imports of goods and services

X – M = the current account balance

The BOP and Exchange Rates:

• A country’s BOP can have a significant impact on the level of its exchange rate and vice versa

• The relationship between the BOP and exchange rates can be illustrated by use of a simplified equation that summarizes BOP Data

(X – M) + (CI – CO) + (FI – FO) + FXB = BOP

• Where:

• X = exports of goods and services

• M = imports of goods and services

• CI = capital inflows

• CO = capital outflows

• FI = financial inflows

• FO = financial outflows

• FXB = official monetary reserves

Best Regards

Prof. Dr. Mazin A. M. Al Janabi

Full Professor of Finance & Banking and Financial Engineering

Tecnologico de Monterrey, EGADE Business School,

Santa Fe Campus, Mexico City, Mexico.

Dear Mazin A. M. Al Janabi ,

Thank you for your helpful detail. I am also sorry that I could not ask kind opinion that time I studied your answer. I am interested to know your opinions on:

1) Existing mechanisms for sending remittances in local currencies (If local currencies are not USD/EURO) except any special arrangements?

2) In BOP, any legitimate term of account in your mentioned term foreign transfer?

3) Your opinion on "official transfers" in brief.

4) BOP and exchange rate relationship is not so straight forward?

Kind regards,

Md Masudul Hasan Shobhon

Special mention Ahmed H. Abdulaziz

Dear Mr. Shobhon,

The Current Account includes all international economic transactions with income or payment flows occurring within one year, the current period. It consists of the following four subcategories:

· Goods trade and import of goods

· Services trade

· Income

· Current transfers

The Current Account is typically dominated by the first component, which is known as the Balance of Trade (BOT) even though it excludes service trade.

A surplus in the BOP implies that the demand for the country’s currency exceeded the supply and that the government should allow the currency value to increase – in value – or intervene and accumulate additional foreign currency reserves in the Official Reserves Account.

A deficit in the BOP implies an excess supply of the country’s currency on world markets, and the government should then either devalue the currency or expend its official reserves to support its value.

A nation’s balance of payments interacts with nearly all of its key macroeconomic variables.

Interacts means that the BOP affects and is affected by such key macroeconomic factors as:

· Gross Domestic Product (GDP)

· The exchange rate

· Interest rates

· Inflation rates

In a static (accounting) sense, a nation’s GDP can be represented by the following equation:

GDP = C + I + G + X – M

The variables from the formula on the previous page are defined as:

C = consumption spending

I = capital investment spending

G = government spending

X = exports of goods and services

M = imports of goods and services

X – M = the current account balance

A country’s BOP can have a significant impact on the level of its exchange rate and vice versa. The relationship between the BOP and exchange rates can be illustrated by use of a simplified equation that summarizes BOP Data.

(X – M) + (CI – CO) + (FI – FO) + FXB = BOP

Where:

X = exports of goods and services

M = imports of goods and services

CI = capital inflows

CO = capital outflows

FI = financial inflows

FO = financial outflows

FXB = official monetary reserves

The BOP and Exchange Rates:

1. Fixed Exchange Rate Countries

Under a fixed exchange rate system, the government bears the responsibility to ensure that the BOP is near zero

2. Floating Exchange Rate Countries

Under a floating exchange rate system, the government has no responsibility to peg its foreign exchange rate

3. Managed Floats

Countries operating with a managed float often find it necessary to take action to maintain their desired exchange rate values

Best Regards

Prof. Dr. Mazin A. M. Al Janabi

Full Professor of Finance & Banking and Financial Engineering

Tecnologico de Monterrey, EGADE Business School,

Santa Fe Campus, Mexico City, Mexico.

Dear Ahmed Hesham,

There is no unifying principle in this matter. It depends on the form in which money is sent from country to country, via which type of transfer or in another form. Besides, through a bank or other institution? In addition, it also depends on various currency systems that may operate in individual countries, from international settlements implemented in specific countries. Besides, the optional currencies are just as exchangeable in individual countries, etc.

Best wishes