Forex Glossary
Forex Glossary
Accrual – The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitration) deals during the period of each deal.
Update – The underlying assets or instruments traded in the cash market.
Adjustable Peg – Term for an exchange rate regime in exchange rates is "a country tied" (Ie fixed) in relation to another currency, often the dollar or French franc, but where the rate may be changed from time to time. This was the basis of the system Bretton Woods. View parity and crawling peg.
Adjustment – Official action normally by either change in economic policies internal to correct the imbalance of payment or the official exchange rate o. Agent Bank –
(1) A bank acting for a foreign bank.
(2) In the market Euro – the agent bank is chosen by the other banks in the syndicate to handle the administration of the loan.
Added Demand – The total demand for goods and services in the economy. Demand includes private and public sector goods and services within the country and the demand of consumers and businesses and other countries for goods and services.
global risk – Size of exposure of a bank to a single customer cash and contracts term. Aggregate Supply – Total supply of goods and services in the economy from domestic sources (including imports) to meet aggregate demand.
Agio – Difference in value between currencies. Also used to describe percentage charges for conversion of paper money in cash, or a weakness in a strong currency. Appreciation – Describes a currency strengthening in response to market demand rather than by official action.
Arbitrage – The purchase and sale simultaneously in different markets, the same or equivalent financial instruments to benefit from price differentials and currency.
The exchange rate differential or interchange points. Can be derived from the deposit rate differentials.
Channel Arbitration – The price range within which there is no possibility of arbitrage between cash and futures market.
About – Used in quoting forward "economic benefits". "Five-five around" would mean five point on either side of this value in situ.
Back Office – Settlement and processes related.
Backwardation – Term referring to the amount that the spot price exceeds the future price.
Balance Payments – A systematic record economic transactions during a given period for a country.
(1) The term is often used to mean: (I) balance payments "current account", or (ii) the current account plus certain movements of long-term capital.
(2) The combination trade balance, current account, capital account and invisible balance, which together make up the balance of payments total. Prolonged balance of payment deficit tend to lead to restrictions on capital transfers, and / or decrease in the values of the currency. Band – The range in which a currency is allowed to move. A system used in TCM. Bank line – Line of credit issued by a bank to a customer, also known as a "line". Bank Rate – The rate at which a central bank is willing to lend money to its domestic banking system. Base Currency – U.S. Dollars.
The currency in which each transaction is converted to final of each position.
Base - The difference between the cash price and futures price. Basis point – For most currencies, it denotes the fourth decimal of the exchange rate and represents one hundredth of one percent (01%). For currencies like the Japanese yen, a basic point is the second decimal place when quoted in currency terms or the sixth and seventh decimal places, respectively, when quoted in reciprocal terms
. Bases trading – Taking opposite positions in the futures market and cash with the intention of profiting from favorable movements in the base.
Basket Cart – A group of currencies normally used to manage the exchange rate of a currency. Sometimes referred to as a unit of account.
market down – A prolonged period of generally falling prices. Bear – An investor who believes prices will fall.
Supply – The price at which a buyer has offered to purchase the currency or instrument. Book – The summary of currency positions held by a dealer, desk or room. A total of assets and liabilities.
If the average book is less than that of the assets, the bank is said to be managing a portfolio of short and open.
In passing the book normally refers to the transfer of the negotiating positions of banks to another office at the end of the day, for example, from London to New York. Bretton Woods – The site of the conference in 1944 led to the establishment of the postwar system of currency that remained intact until the early 1970s.
The conference resulted in the formation of the IMF. The system fixed currencies in a system of fixed exchange rate of 1% fluctuations of the currency of gold or the dollar.
Broker – Bringing buyers and sellers for a commission paid by the initiator of the transaction. Runners do not have market positions.
Bull market – A prolonged period of general price increases.
Bull – An investor who believes that prices will rise. Bundesbank – Central Bank Germany.
Buying Rate – Rate at which the market and a market maker in particular is willing to buy the currency. This is sometimes called discount rate.
Asset Allocation – Dividing instrument funds among markets to achieve diversification or maximum profitability.
Ask – The price at which the currency or instrument offers.
Assets – In the context of foreign currencies the right to receive from the other party an amount of currency either in respect of a balance sheet asset (eg a loan) or at a specified future date in relation beaten with a front forward or spot deal.
At best – An instruction given to a dealer to buy or sell at the best price which can be obtained.
Equal or better – A to deal with a specific rate or better. Authorized Dealer – A financial institution or a bank licensed to operate in shifts.
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