A cross rate refers to the exchange rate between two currencies which is derived from their individual exchange rates with a third currency, often the US dollar.
Currency appreciation refers to an increase in the value of a currency relative to another currency, while currency depreciation refers to a decrease in the value of a currency relative to another currency. These concepts are pivotal in international trade, impacting everything from import/export prices to inflation rates.
A dirty float, also known as a managed float system, is an exchange rate system where the value of a currency is determined by supply and demand factors in the foreign exchange market, but where the government or central bank occasionally intervenes to stabilize or manage the currency.
A financial market is a marketplace where the trading of financial instruments such as stocks, bonds, commodities, and currencies occurs. These markets facilitate the exchange of capital and credit in the economy.
A floating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate due to market forces without direct governmental control. However, governments and central banks may intervene to stabilize the currency if necessary.
Forward margin, also referred to as forward points, is an essential concept in the foreign exchange market, reflecting the difference between the spot rate and the forward rate for a currency pair.
A forward-exchange market is a segment of the foreign-exchange market where currencies are traded for delivery at a specific date in the future. This market is used to hedge against the risk of currency fluctuations.
A code of best practice, issued by the Bank of England, for traders and brokers in the wholesale markets in Non-Investment Products (NIPs), specifically the sterling, foreign exchange, and bullion markets.
Special Drawing Rights (SDRs) are supplementary foreign exchange reserve assets, created and maintained by the International Monetary Fund (IMF). Known informally as 'paper gold', SDRs were first issued in 1970 with the aim to supplement member countries' official reserves, providing liquidity and enhancing global financial stability.
