Where the settlement of a deal is carried forward to another value date based on the interest rate differential of the two currencies e.g. the next day. On some instruments there may be fee charged.
The substituting of a far option for a near option of the same underlying stock at the same strike/exercise price.
There are risks associated with any market. It means variance of the returns and the possibility that the actual return might not be in line with the expected returns. The risks associated with trading are: market, exchange, interest rate, yield curve, volatility, liquidity, forced sale, counter party, credit, and country risk.
The identification and acceptance or offsetting of the risks threatening the profitability or existence of an organisation. With respect to foreign exchange involves, among others, consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.
Additional sum payable or return to compensate a party for adopting a particular risk.
Increase in the exchange rate of a currency as a result of official action.
Retail Price Index
Measurement of the monthly change in the average level of prices at retail, normally of a defined group of goods.
A price level at which the selling is expected to take place.
Funds held against future contingencies, normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. They are an asset in the balance of payments.
A currency held by a central bank on a permanent basis as a store of international liquidity, these are normally Dollar and Sterling.
A decline in business activity. Often defined as two consecutive quarters with a real fall in GNP.
The price of one currency or asset in terms of another. It has the same meaning as the term parities.
The difference between the highest and lowest price of a future recorded during a given trading session.