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IMF
International Monetary Fund.
IMF
International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. The IMF supports countries with balance of payments problems with the provision of loans.
IMM
International Monetary Market, part of the Chicago Mercantile Exchange that lists a number of currency and financial futures implied volatility. A measurement of the market's expected price range of the underlying currency futures based on the traded option premiums.
Implied Rates
The interest rate determined by calculating the difference between spot and forward rates.
Indicative Quote
A market-maker's price which is not firm.
Inflation
Continued rise in the general price level in conjunction with a related drop in purchasing power. Sometimes referred to as an excessive movement in such price levels.
Initial Margin
The deposit required before a client can transact a deal.
Inter-Bank Rates
The bid and offer rates at which international banks place deposits with each other. The basis of the Interbank market.
Interest Arbitrage
Switching into another currency by buying spot and selling forward, and investing proceeds in order to obtain a higher interest yield. Interest arbitrage can be inward, i.e. from foreign currency into the local one or outward, i.e. from the local currency to the foreign one. Sometimes better results can be obtained by not selling the forward interest amount. In that case some treat it as no longer being a complete arbitrage, as if the exchange rate moved against the arbitrageur, the profit on the transaction may create a loss.
Interest Parity
The interest parity theory is if there are two financial instruments in different currencies but identical in risk and maturity (e.g. three month UK gilts and US Treasury bills), then a difference in the interest rate on the instruments will be reflected in the premium or discount for the forward exchange rate.
Interest Rate Swaps
An agreement to swap interest rate exposures from floating to fixed or vice versa. There is no swap of the principal. It is the interest cash flows be they payments or receipts that are exchanged.
Internationalization
Referring to a currency that is widely used to denominate trade and credit transactions by non residents of the country of issue. US dollar and Swiss Franc are examples.
Intervention
Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.
In-the-Money
In call options, when the strike price is below the price of the underlying contract. In put options, when the strike price is above the price of the underlying contract. In-the-money options are the most expensive options because the premium includes intrinsic value.
Intrinsic Value
For in-the-money call and put options, the difference between the strike price and the underlying contract price. |
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