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Friday, August 29, 2008
FOREX GLOSSARY
Easing
A decline in interest rates initiated by the central.
EBS
Electronic Brokerage System", the electronic system on which major banks trade with each other. This is considered to be the most definitive indicator of prices at which currencies are "really" trading, at least for EUR/USD and USD/JPY.
ECB - European Central Bank
The Central Bank for the European Monetary Union.
Economic Exposure
Reflects the impact of foreign exchange changes on the future competitive position of a company.
Economic Indicator
A statistic that indicates current economic growth and stability issued by the government or a non-government institution (i.e. Gross Domestic Product (GDP), Employment Rates, Trade Deficits, Industrial Production, and Business Inventories).
The principal goal of the EMU is to establish a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. On Janaury1, 1999 the transitional phase to introduce the Euro began. The Euro now exists as a banking currency and paper financial transactions and foreign exchange are made in Euros. This transition period will last for three years, at which time Euro notes an coins will enter circulation. On July 1,2002, only Euros will be legal tender for EMU participants, the national currencies of the member countries will cease to exist. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.
ECU
European Currency Unit.
Either way market
In the Euro Interbank deposit market where both bid and offer rates for a particular period are the same.
End Of Day (Mark-to-Market)
Traders account for their positions in two ways: accrual or mark-to-market. An accrual system accounts only for cash flows when they occur, hence, it only shows a profit or loss when realized. The mark-to-market method values the trader`s book at the end of each working day using the closing market rates or revaluation rates. Any profit or loss is booked and the trader will start the next day with a net position.
Euro
The currency of the European Monetary Union (EMU) which replaced the European Currency Unit (ECU).
Eurocurrency
A currency deposited outside its country of origin.
Eurodollars
US dollars deposited in a bank (US or non US) located outside the USA.
European Monetary System (EMS)
A system designed to stabilize, if not eliminate, exchange risk between member states of the EMS as part of the economic convergence policy of the EU. It permits currencies to move in a measured fashion (divergence indicator) within agreed bands (the parity grid) with respect to the ECU and consequently with each other.
European Union
The group formerly known as the European Community.
Euro Rates
The interest rates quoted for Euro-currencies over specific periods.
Exchange
A physical location where instruments are traded and often regulated. Examples: the New York Stock Exchange, the Chicago Board of Trade.
Exchange control
A system of controlling inflows and out flows of foreign exchange, devices include licensing multiple currencies, quotas, auctions, limits, levies and surcharges.
Execution
The Process of completing an order or deal.
Execution Date
The date on which a trade occurs.
Exotic
A less broadly traded currency
Exposure
(i) Net working capital - The current assets in a foreign currency minus current liabilities in the currency;
(ii) Net financial method - The current assets in a foreign currency minus current liabilities and long term debt in the currency;
(iii) Monetary/non-monetary method - Monetary assets and liabilities in the foreign currency are valued at present exchange rates, while non-monetary items are entered at the relevant historic rates.
Extrinsic Value
Commonly referred to as the "time" value and is defined as the value of an option beyond the intrinsic value.
A decline in interest rates initiated by the central.
EBS
Electronic Brokerage System", the electronic system on which major banks trade with each other. This is considered to be the most definitive indicator of prices at which currencies are "really" trading, at least for EUR/USD and USD/JPY.
ECB - European Central Bank
The Central Bank for the European Monetary Union.
Economic Exposure
Reflects the impact of foreign exchange changes on the future competitive position of a company.
Economic Indicator
A statistic that indicates current economic growth and stability issued by the government or a non-government institution (i.e. Gross Domestic Product (GDP), Employment Rates, Trade Deficits, Industrial Production, and Business Inventories).
The principal goal of the EMU is to establish a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. On Janaury1, 1999 the transitional phase to introduce the Euro began. The Euro now exists as a banking currency and paper financial transactions and foreign exchange are made in Euros. This transition period will last for three years, at which time Euro notes an coins will enter circulation. On July 1,2002, only Euros will be legal tender for EMU participants, the national currencies of the member countries will cease to exist. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.
ECU
European Currency Unit.
Either way market
In the Euro Interbank deposit market where both bid and offer rates for a particular period are the same.
End Of Day (Mark-to-Market)
Traders account for their positions in two ways: accrual or mark-to-market. An accrual system accounts only for cash flows when they occur, hence, it only shows a profit or loss when realized. The mark-to-market method values the trader`s book at the end of each working day using the closing market rates or revaluation rates. Any profit or loss is booked and the trader will start the next day with a net position.
Euro
The currency of the European Monetary Union (EMU) which replaced the European Currency Unit (ECU).
Eurocurrency
A currency deposited outside its country of origin.
Eurodollars
US dollars deposited in a bank (US or non US) located outside the USA.
European Monetary System (EMS)
A system designed to stabilize, if not eliminate, exchange risk between member states of the EMS as part of the economic convergence policy of the EU. It permits currencies to move in a measured fashion (divergence indicator) within agreed bands (the parity grid) with respect to the ECU and consequently with each other.
European Union
The group formerly known as the European Community.
Euro Rates
The interest rates quoted for Euro-currencies over specific periods.
Exchange
A physical location where instruments are traded and often regulated. Examples: the New York Stock Exchange, the Chicago Board of Trade.
Exchange control
A system of controlling inflows and out flows of foreign exchange, devices include licensing multiple currencies, quotas, auctions, limits, levies and surcharges.
Execution
The Process of completing an order or deal.
Execution Date
The date on which a trade occurs.
Exotic
A less broadly traded currency
Exposure
(i) Net working capital - The current assets in a foreign currency minus current liabilities in the currency;
(ii) Net financial method - The current assets in a foreign currency minus current liabilities and long term debt in the currency;
(iii) Monetary/non-monetary method - Monetary assets and liabilities in the foreign currency are valued at present exchange rates, while non-monetary items are entered at the relevant historic rates.
Extrinsic Value
Commonly referred to as the "time" value and is defined as the value of an option beyond the intrinsic value.
Labels: Forex Glossary
