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Appreciation - When a currency strengthens due to market demand.

Ask - The price at which the currency is offered.

Back Office - The term for the part of the organisation that deals with the settlement and processesing of completed trades.

BACS: Bankers Automated Clearing Services -an electronic transfer system for Sterling clearing for domestic banks. Usually takes 2 working days for the transfer

Balance of Payments - The record of the economic transactions of a country during a given period. EG The outgoing against the incoming foreign payments

Bank Rate - The interest rate at which a countries central bank lends money to its domestic banking system.

Bear - A 'Bear' is an investor who believes that prices in a market are going to fall. Hence also 'Bear Market'

Bid - Bid is the price at which a buyer has offered to purchase the currency

Broker - A Broker is a person whom brings buyers and sellers together in a market. Brokers do not take market positions.

Bull - An investor who believes that market prices are going to rise .Also Bull Market

Buying Rate -See also Bid Price The Buying or Buy rate is the rate at which you can buy in the market place, determined by the buyer and seller.

Cable - A long established nickname for the US Dollar/British Pound rate in the foreign exchange market. Derived from the telephone 'cable' that ran under the Atlantic

CHAPS: Clearing House Automated Payment System - a same day electronic transfer system used by UK clearing Banks

Contract - In the context of foreign exchange a contract is an agreement to buy or sell a specified amount of a particular currency.

Conversion - The actual process by which a sum denominated in one currency is exchanged for a sum denominated in another currency.

Convertible currency - A currency that can be exchanged without restriction for another currency from the central bank.

Cross rates - The Rate between two currencies, for example GBP/EURO Deal date - The date on which a transaction is agreed upon.

Delivery date - Also known as the value date, it is the date of maturity of the contract and when the exchange of the currencies is made.

EFT - Electronic Fund Transfer. The transfer of funds between banks. Also known as a wire transfer.

Foreign Exchange - The purchase or sale of a currency against the sale or purchase of another currency.

Forex - A nickname to describe the foreign exchange market.

Forward Rate - A Forward rate is based on the interest rate differentials. It is a type of contract that allows you to fix an exchange rate today for a date in the future.

Fundamentals - There are many factors that affect currency exchange rates. Macro economic factors play a large part and these are known as Fundamentals and include inflation, government deficit,trade balance,growth and interest rates.

FX - Foreign Exchange.

Gross Domestic Product - The total value of a country's output, income or expenditure.The GDP is a measure of its economic activity.

Gross National Product - Gross domestic product plus income earned from investment or work abroad.

Hedge - Hedging is to protect oneself from currency fluctuautions.

Indicative quote - An exchange rate quote which is not firm.

Inter-bank rates - The bid and offer exchange rates at which international banks place buy and sell currency with each other. These prices are the basis of the market exchange rates.

Limit order - A written order to request the purchase or sale of currency at apre-determined exchange rate.

Offer - The offer price is the price at which a seller is willing to sell an amount of currency.

Pip - A pip is one unit of price on the exchange rate.For most currencies, it denotes the fourth decimal place in an exchange rate and represents 1/100 of one percent (.01%).

Position - A position is a measure of a commitment in a given currency. A position can be either flat, long, (more currency bought than sold), or short ( more currency sold than bought).

Profit Taking - When a position is held in a currency it is sometimes liquidated to realise a profit.

Quote - A quote is an indicative price for a currency.

Range - Range is the difference between the highest and lowest price of a currency during a given trading period, normally a day.

Same day transaction - A transaction that matures on the day the transaction takes place.

Selling rate - The exchange rate at which a bank is willing to sell foreign currency.

Settlement date - The date which foreign exchange contracts settle.

Spot rate - An foreign exchange transaction that requires settlement within two business days. Spot rate is the most common rate.

Spread -The Spread is the difference between the bid and ask price of a currency.

Stop-Loss order - A written order to buy or sell currency at the best available price when an agreed price has been reached.

Transaction date - The date on which a foreign exchange trade happens.

Value Date - For a spot transaction it is two business banking days forward.

Working day - A day on which the banks are open for business. For FX transactions, a working day only occurs if the bank in both financial centre's are open for business


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