Carry trade is a financial strategy that involves borrowing funds in a low-interest-rate market and investing them in a higher return market. This practice capitalizes on the interest rate differential between two markets to generate profit.
A cross rate refers to the exchange rate between two currencies which is derived from their individual exchange rates with a third currency, often the US dollar.
Currency appreciation refers to an increase in the value of a currency relative to another currency, while currency depreciation refers to a decrease in the value of a currency relative to another currency. These concepts are pivotal in international trade, impacting everything from import/export prices to inflation rates.
An exchange rate is the price of one currency in terms of another currency. It is a crucial element in the global economy, impacting international trade, investments, and the purchasing power of consumers.
An in-depth look at the foreign exchange market, commonly known as FOREX or FX, where currencies are traded.
A highly liquid global marketplace for currency trading. The foreign exchange market includes both the spot market for immediate transactions and the forward market for future transactions.
A foreign exchange rate is the price of a nation's currency in units of another currency, indicating how much one currency is worth in terms of another.
The amount to be added to or deducted from the spot foreign-exchange rate to calculate the forward exchange rate.
The official exchange rate of a country's currency as determined by that country's government.
A Telegraphic Transfer, abbreviated as TT, is an electronic method of transferring funds utilized mainly in banking to move money quickly between bank accounts worldwide. This method became standard before today's more modern and efficient electronic transfer systems.
Transaction exposure refers to the risk that a firm's exposure to exchange-rate fluctuations will impact the value of anticipated cash flows from a transaction when the contractual obligation is settled.
A weak dollar refers to a situation where the value of the U.S. dollar has fallen relative to other foreign currencies. This results in the dollar’s decreased purchasing power in comparison to other currencies such as the pound, yen, euro, or francs.
