A cambist is an expert in foreign exchange. In the old days, a cambist relied on interpreting books of information about exchange rates between various currencies.
Currency risk, also called foreign-exchange risk or exchange-rate risk, is the risk that changes in the relative value of certain currencies will reduce the value of investments denominated in a foreign currency. Currency risk may be the single biggest risk for holders of bonds that make interest and principal payments in a foreign currency.
D-mark is slang for deutschmark, the national currency of Germany until it joined the European Union in 2002. For example, let's say you're at a cocktail party looking to impress some Wall Street currency traders.
Daily cut-off is a term signifying the end of the trading day for foreign exchange markets. For example, let’s look at the markets for Japanese and American currencies.
Devaluation refers to a decrease in a currency's value with respect to other currencies. A currency is considered devalued when it loses value relative to other currencies in the foreign exchange market.
E-micro forex futures are currency futures contracts that are a 10th the size of a standard futures contract. Forex futures are financial contracts giving the buyer an obligation to purchase a certain currency (and the seller an obligation to sell that currency) at a set price at a future point in time.Let’s say you manufacture jewelry in the United States but plan to open a plant in Japan.
An ECN broker is a person who uses electronic communications networks to give clients access to buyers and sellers in the currency markets. An ECN broker is sort of like a market maker for currency markets.
An exchange rate between two countries' currencies indicates the value of one currency relative to the other. Let's say the current exchange rate between the dollar and the euro is 1.23 $/€.This means that to obtain one euro, you would need 1.23 dollars.
Exchange-rate risk, also called currency risk, is the risk that changes in the relative value of certain currencies will reduce the value of investments denominated in a foreign currency. Exchange-rate risk may be the single biggest risk for holders of bonds that make interest and principal payments in a foreign currency.
A fixed exchange rate pegs one country's currency to another country’s currency.It is also known as a pegged exchange rate.
A floating exchange rate refers to changes in a currency's value relative to another currency (or currencies). Floating exchange rates mean that currencies change in relative value all the time.
Foreign currency effects refer to the fluctuations in returns on offshore investments as a result of changes in the value of the investment's denominated currency against that of the domestic currency. Investors who hold securities issued in foreign countries bear the effects of foreign currency fluctuations as manifest in lower or higher returns upon repatriation to the domestic currency.
Foreign Exchange, also known as Forex or FX, is an over-the-counter market.Forex trading is how individuals, banks, and businesses convert one currency into another.
Foreign-exchange risk refers to the potential for loss from exposure to foreign exchange rate fluctuations. Foreign-exchange risk is similar to currency risk and exchange-rate risk.
Hard currency is currency that has been adopted as an acceptable payment method in multiple countries. Hard currencies are generally issued by developed countries that have a strong industrial economy accompanied by a stable government.
A hard loan is a loan between a lender and borrower in different countries that is denominated in a hard currency. For example, a hard loan from a lender in Cambodia to a borrower in Thailand may be denominated in U.K.
An international currency exchange rate is the rate at which one currency converts to another. For example, if the international currency exchange rate for one U.S.
A key currency is a currency used to set the exchange rate in an international transaction. Let's say Country A has a tiny economy and an unstable government.
Major pairs are the four pairs of currencies that are most commonly traded in the foreign exchange markets. The major pairs are Euro/U.S.
Used in foreign exchange (forex), a negative carry pair refers to a situation in which the investor buys the currency of a country with low interest rates and shorts the currency of a country with high interest rates.It is the opposite of a positive carry pair trading strategy.
Net interest rate differential is the difference in interest rates associated with two different currencies or two different economic regions. For example, let's assume an investor in Japan puts her Japanese savings in a Japanese bank and earns interest at Japanese interest rates (say 8%).
An offshore banking unit is a bank branch in another country. For example, let's assume that Bank XYZ is an American bank with a branch in Bermuda.
Also called secondary currency or counter currency, a quote currency is the currency being purchased in a currency pair. Four main pairs of currencies are most commonly traded in the foreign exchange markets.
A weak currency is a currency that is going down in value. A currency's value fluctuates all the time.
A weak dollar is used to describe the United States' currency decreasing in value relative to other currencies. The dollar's value is fluctuating all the time.