The following offers brief explanation of the most popular terms used in the
market today.
Total exposure a bank has with a customer for both spot
and forward contracts.
Total demand for goods and services in the economy.
Aggregate demand includes private and public sector
demand for goods and services within the country, and the
demand of consumers and firms in other countries for goods
and services.
Total supply of goods and services in the economy (including
imports) available to meet aggregate demand.
Difference in the value between currencies. Also used to
describe percentage charges for conversion from paper
money into cash, or from a weak into a strong currency.
An option which may be exercised on any valid business
date throughout the life of the option. A European option
can only be exercised on a specific date.
Describes a currency strengthening in response to market
demand as opposed to increasing in value as a result of
official action.
A risk-free type of trading where the same instrument is
bought and sold simultaneously in two different markets in
order to cash in on the difference between the markets.
Used in quoting forward “premium/discount”.
The price at which the currency or instrument is offered.
Ask is the lowest price acceptable to the buyer.
The right to receive from a counterparty an amount of
currency either in regards to a balance sheet asset (e.g. a
loan), or at a specified future date in regards to an
unmatched Forward or spot deal.
Association Cambiste
International
The international society of foreign exchange dealers
consisting of national "Forex clubs" affiliated on a worldwide
basis.
An instruction given to a dealer to buy or sell at the best
rate that is currently available in the market.
An order to deal at a specific rate or better.
When the forward price is equivalent to the spot price.
At the Price Stop-Loss
Order
A stop-loss order that must be executed at the requested
level regardless of market conditions.
version: September 2006 / 75 of 111
