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Accrual
The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitrage) deals, over the period of each deal.
Actualize
The underlying assets or instruments which are traded in the cash market.
Adjustable Peg
Term for an exchange rate regime where a country's exchange rate is "pegged" (i.e. 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 Bretton Woods system. See peg, and crawling peg.
Adjustment
Official action normally by either change in the internal economic policies to correct a payment imbalance or in the official currency rate or.
Agent Bank
(1) A bank acting for a foreign bank. (2) In the Euro market - the agent bank is
the one appointed by the other banks in the syndicate to handle the administration of the loan.
Aggregate Demand
Total demand for goods and services in the economy. It includes private and public sector demand for goods and services within the country and the demand of consumers and and firms in other countries for good and services.
Aggregate Risk
Size of exposure of a bank to a single customer for both spot and forward contracts.
Aggregate Supply
Total supply of goods and services in the economy from domestic sources (including imports) available to meet aggregate demand.
Agio
Difference in the value between currencies. Also used to describe percentage charges for conversion from paper money into cash, or from a weak into a strong currency.
Appreciation
Describes a currency strengthening in response to market demand rather than by official action.
Arbitrage
Dealing in two or more markets at the same time (or in similar products in the same market) to take advantage of temporary mispricing in order to make a profit.
Arbitrage Channel
The range of prices within which there will be no possibility to arbitrage between the cash and futures market.
Around
Used in quoting forward "premium / discount". "Five-five around" would mean five point on either side of the present spot value.
Asset Allocation
Dividing instrument funds among markets to achieve diversification or a maximum return.
Ask
The price at which the currency or instrument is offered.
Asset
In the context of foreign exchange is the right to receive from a counterparty an amount of currency either in respect of a balance sheet asset (e.g. a loan) or at a specified future date in respect of an unmatched forward or spot deal.
At Best
An instruction given to a dealer to buy or sell at the best rate that can be obtained.
At or Better
An order to deal at a specific rate or better.
At-The-Money
In options, when the strike price equals the price of the underlying contract.
Authorized Dealer
A financial institution or bank authorized to deal in foreign exchange. |
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