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The yen is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar and the euro. It is also widely used as a third reserve currency after the US dollar and the euro.
The New Zealand dollar is the official currency and legal tender of New Zealand, the Cook Islands, Niue, the Ross Dependency, Tokelau, and a British territory, the Pitcairn Islands. Within New Zealand, it is almost always abbreviated with the dollar sign ($). The abbreviations "$NZ" or "NZ$" are used when necessary to distinguish it from other dollar-denominated currencies.
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of the euro.
Listed below is a table of historical exchange rates relative to the U.S. dollar, at present the most widely traded currency in the world. An exchange rate represents the value of one currency in another. An exchange rate between two currencies fluctuates over time. The value of a currency relative to a third currency may be obtained by dividing one U.S. dollar rate by another. For example, if there are ¥120 to the dollar and €1.2 to the dollar then the number of yen per euro is 120/1.2 = 100.
The foreign exchange market is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the credit market.
A currency future, also known as an FX future or a foreign exchange future, is a futures contract to exchange one currency for another at a specified date in the future at a price that is fixed on the purchase date; see Foreign exchange derivative. Typically, one of the currencies is the US dollar. The price of a future is then in terms of US dollars per unit of other currency. This can be different from the standard way of quoting in the spot foreign exchange markets. The trade unit of each contract is then a certain amount of other currency, for instance €125,000. Most contracts have physical delivery, so for those held at the end of the last trading day, actual payments are made in each currency. However, most contracts are closed out before that. Investors can close out the contract at any time prior to the contract's delivery date.
The bid–ask spread is the difference between the prices quoted for an immediate sale (ask) and an immediate purchase (bid) for stocks, futures contracts, options, or currency pairs in some auction scenario. The size of the bid–ask spread in a security is one measure of the liquidity of the market and of the size of the transaction cost. If the spread is 0 then it is a frictionless asset.
In finance, a foreign exchange option is a derivative financial instrument that gives the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. See Foreign exchange derivative.
In finance, a non-deliverable forward (NDF) is an outright forward or futures contract in which counterparties settle the difference between the contracted NDF price or rate and the prevailing spot price or rate on an agreed notional amount. It is used in various markets such as foreign exchange and commodities. NDFs are also known as forward contracts for differences (FCD). NDFs are prevalent in some countries where forward FX trading has been banned by the government.
In finance, a currency swap is an interest rate derivative (IRD). In particular it is a linear IRD, and one of the most liquid benchmark products spanning multiple currencies simultaneously. It has pricing associations with interest rate swaps (IRSs), foreign exchange (FX) rates, and FX swaps (FXSs).
In finance, a foreign exchange swap, forex swap, or FX swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates and may use foreign exchange derivatives. An FX swap allows sums of a certain currency to be used to fund charges designated in another currency without acquiring foreign exchange risk. It permits companies that have funds in different currencies to manage them efficiently.
A currency pair is the quotation of the relative value of a currency unit against the unit of another currency in the foreign exchange market. The currency that is used as the reference is called the counter currency, quote currency, or currency and the currency that is quoted in relation is called the base currency or transaction currency.
Electronic Broking Services (EBS) is a wholesale electronic trading platform used to trade on the foreign exchange market (FX) with market-making banks. It was originally created as a partnership by large banks and then became part of CME Group.
The Asian Clearing Union (ACU) was established on December 9, 1974, at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). The primary objective of ACU, at the time of its establishment, was to secure regional co-operation regarding the clearing of eligible monetary transactions among the members of the Union to provide a system for clearing payments among the member countries on a multilateral basis.
The carry of an asset is the return obtained from holding it, or the cost of holding it. For instance, commodities are usually negative carry assets, as they incur storage costs or may suffer from depreciation. But in some circumstances, appropriately hedged commodities can be positive carry assets if the forward/futures market is willing to pay sufficient premium for future delivery. This can also refer to a trade with more than one leg, where you earn the spread between borrowing a low carry asset and lending a high carry one; such as gold during financial crisis, due to its safe haven quality.
Retail foreign exchange trading is a small segment of the larger foreign exchange market where individuals speculate on the exchange rate between different currencies. This segment has developed with the advent of dedicated electronic trading platforms and the internet, which allows individuals to access the global currency markets. As of 2016, it was reported that retail foreign exchange trading represented 5.5% of the whole foreign exchange market.
A percent allocation management module, commonly known as PAMM, also sometimes referred to as percent allocation money management, describes a software application used predominantly by foreign exchange (forex) brokers to allow their clients to attach money to a specific trader managing one or more accounts appointed on the basis of a limited power of attorney. PAMM solution allows the trader on one trading platform to manage simultaneously unlimited quantity of managed accounts. Depending on the size of the deposit, each managed account has its own ratio in PAMM. Trader's activity results are allocated between managed accounts according to the ratio.
The Wall Street Journal Dollar Index is an index of the value of the U.S. dollar relative to 16 foreign currencies.
The Euro Currency Index (EUR_I) represents the arithmetic ratio of four major currencies against the Euro: the American dollar, British sterling, the Japanese yen and the Swiss franc. All ratios are expressed in units of currency per Euro. The index was launched in 2004 by the exchange portal Stooq.com. Underlying are 100 points on 4 January 1971. Before the introduction of the European single currency on 1 January 1999 an exchange rate of 1 euro = DM 1.95583 was calculated.
In foreign exchange market, synthetic currency pair or synthetic cross currency pair is an artificial currency pair which generally is not available in market but one needs to trade across those pairs. One highly traded currency, usually United States dollar, which trades with the target currencies, is taken as intermediary currency and offsetting positions are taken on target currencies. The use of synthetic cross currency pairs has become less common with wide availability of most common currency pairs in the market.
References
- ↑ "What Are Pips in Forex Trading and What Is Their Value?" . Retrieved 24 July 2023.
- ↑ Abdulla, Mouhamed (March 2014). Understanding Pip Movement in FOREX Trading (PDF) (Report). Archived from the original (PDF) on 2020-03-31. Retrieved 2014-03-26.
- ↑ "Calculating fx forward points" . Retrieved 11 December 2019.
- ↑ "How to calculate the value of a PIP".
- ↑ "Calculating fx forward points".
- ↑ "Home". referralforex.com. Archived from the original on 2017-11-01. Retrieved 2017-11-17.
- ↑ "Pips and Spreads Explained - Forex Trading Basics". www.forexbrokersreviews.com. Retrieved 2017-04-04.
- ↑ "Fenics MD » RATES". Fenics MD. Retrieved 16 March 2020.