Exchange Rates Currency band Exchange rate Exchange rate regime Fixed exchange rate Floating exchange rate Linked exchange rate In finance, the exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other. ... Image File history File links Forex. ... The currency band is a system of exchange rates by which a floating currency is backed by hard money. ... The exchange rate regime is the way a country manages its currency in respect to foreign currencies and the foreign exchange market. ... A fixed exchange rate, sometimes (less commonly) called a pegged exchange rate, is a type of exchange rate regime wherein a currencys value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold. ... A floating exchange rate or a flexible exchange rate is a type of exchange rate regime wherein a currencys value is allowed to fluctuate according to the foreign exchange market. ... A linked exchange rate system is a type of exchange rate regime to link the exchange rate of a currency to another. ...
Markets Foreign exchange market Futures exchange The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. ... A futures exchange, or futures and options exchange is a corporation or mutual organization which provides the facilities to trade derivatives such as futures contracts and options. ...
Products Currency Currency future Forex swap Currency swap Foreign exchange option A currency future, also FX future or foreign exchange future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the last trading date. ... A currency swap is a foreign exchange agreement between two parties to exchange a given amount of one currency for another and, after a specified period of time, to give back the original amounts swapped. ... In finance, a foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. ...
See also Bureau de Change A Bureau de Change is an organisation or facility which allows customers to exchange one currency for another. ...
Forex swap is an over the countershort term interest ratederivative instrument. A Forex swap consists of a spot foreign exchange transaction entered into at exactly the same time and for the same quantity as a forward foreign exchange transaction. The forward portion is the reverse of the spot transaction, where the spot purchase is offset by a forward selling. In this reason, surplus funds in one currency are for a while swapped into another currency for better use of liquidity. Protects against adverse movements in the forex rate, but favourable moves are renounced. See separate articles for over-the-counter trading and the medical condition Ornithine Transcarbamylase Deficiency. ... An interest rate is the price a borrower pays for the use of money he does not own, and the return a lender receives for deferring his consumption, by lending to the borrower. ... In finance, a derivative security is a contract that specifies the rights and obligations between the issuer of the security and the holder to receive or deliver future cash flows (or exchange of other securities or assets) based on some future event. ...
It should not be confused with a currency swap, which is a much rarer, long term transaction, governed by a slightly different set of rules. A currency swap is a foreign exchange agreement between two parties to exchange a given amount of one currency for another and, after a specified period of time, to give back the original amounts swapped. ...
In emerging money markets, Forex swaps are usually the first derivative instrument to be traded, ahead of Forward rate agreements. This article needs to be cleaned up to conform to a higher standard of quality. ...
The swap was soon widely available from other banks through dissemination by corporate clients to their relationship banks in search of a better price and also through the movement of bank staff to other banks (See the separate chapter on ethics!).
But unlike a rolled Forex contract, which would have fallen foul of Bank of England regulations against transactions at off-market rates, the swap was not rolled; it was simply not terminated until either party opted to do so.
By maintaining the ability to terminate the swap within a year, the bank was able to regard the swap as a one year transaction.
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