foreign exchange

     Foreign exchange is not all that difficult. Most people are just not used to thinking about it. Each country has its own money. You recognize American money--the green stuff with the pictures of American presidents and other founders of our nation. You can only spend American money in America. If you travel to another country, you have to "exchange" your American money for the local currency. The "exchange rate" at the time you make the "exchange" determines how much foreign currency you will get for your American dollars. The "exchange rate" changes frequently--the business that "exchanges" your money will have the latest rates. When you leave the foreign country, you can "exchange" any foreign currency you still have ( the money you didn't spend ) for American dollars again. That is how "foreign exchange" works on a personal level.
    What goes on between nations--foreign "trade"-- determines the exchange rate. On a fundamental level, you can't spend any money but the local currency, anywhere. So the only reason anyone would want American dollars, for example, would be because they want to spend them on something American. There would have to be something in America that they want to buy. Since there are laws everywhere, the something they want to buy would have to be something that our government and theirs would permit. It really is as simple as "trade" when you understand it. If we don't have any "stuff" that someone else wants, then our money is of no use to them. If another country doesn't have any "stuff" that we want, then their money is no use to us. Foreign exchange becomes more complex when we sell something to a foreign country, but we don't want to buy anything from them. Then we have "currency" ( even if the deal isn't made in cash ) from a foreign country, but nothing to spend it on. What happens next is more "exchanging"--we buy something we want from another nation, and pay them with the foreign currency. They may want the foreign currency because the nation it comes from has something they want. Or they may continue to "trade" both goods and currency, until each country has made a deal for something it wants.
     If a country has nothing to export ( sell to foreign nations )--either because it is too poor, or because no one wants what it has in surplus--it becomes very difficult, if not impossible to import ( buy from a foreign nation ) anything. It is called "foreign trade" for a reason. If there is really nothing to buy, no one will want the country's currency--so no one can sell them anything.  This leaves some countries, especially in this age of  technology, much poorer than others.