In the context of Foreign Exchange (FX), the acquisition rate refers to the rate at which a company or financial institution acquires a particular currency. It can also describe the exchange rate at which an entity purchases foreign currency for the purpose of conducting business, managing liquidity, or executing transactions.
In thee context of Foreign Exchange (FX), arbitrage refers to the practice of exploiting price differences in the exchange rates of the same currency pair across different markets or platforms to make a profit. The goal of arbitrage is to buy a currency at a lower price in one market and simultaneously sell it at a higher price in another, without any risk, because the transactions occur almost simultaneously.
In the context of foreign exchange (FX), the ask price is the price at which a market maker or broker is willing to sell a currency. It represents the amount of the quote currency (the second currency in a currency pair) required to buy one unit of the base currency (the first currency in the pair).
A base currency is the first currency in a currency pair against which the value of another currency (the quote currency) is measured.
A basis point (often abbreviated as bps) is a unit of measurement used in finance to express changes in interest rates, bond yields, or other percentages. One basis point is equal to 0.01% or 1/100th of a percent.
In the context of foreign exchange (FX), the bid price is the price at which a buyer (or market maker) is willing to purchase a currency. It represents the highest price a buyer is willing to pay for the base currency in a currency pair.
The Bid-Ask Spread in foreign exchange (FX) refers to the difference between the bid price and the ask price in a currency pair. It represents the transaction cost for traders when buying and selling currencies.
Central bank intervention refers to the actions taken by a country's central bank to influence the value of its national currency or stabilize financial markets.
A clearing house is a financial institution that acts as an intermediary between buyers and sellers in financial markets.
Counterparty risk, also known as credit risk, refers to the likelihood that the other party in a financial transaction (the counterparty) will not fulfill their obligations as agreed. This could involve failing to make payments, defaulting on a loan, or not delivering on a contract.
A cross-rate is the exchange rate between two currencies, each of which is quoted against a common third currency-most often the U.S. dollar (USD).
A currency option is a financial derivative contract that gives the buyer the right, but not the obligation, to buy or sell a specific amount of foreign currency at a predetermined exchange rate (known as the strike price) on or before a specified expiration date. To obtain this right, the buyer pays a premium to the seller of the option.
A currency pair is a quotation that shows the relative value of one currency against another in the foreign exchange (forex) market.
A currency peg is a fixed exchange rate system where a country’s currency is tied or "pegged" to another major currency, such as the U.S. dollar or the euro. This means the pegged currency maintains a consistent value relative to the anchor currency.
Currency risk, also known as foreign exchange risk or exchange-rate risk, is the possibility of financial loss that arises from unpredictable fluctuations in the value of one currency relative to another.
A currency swap is a financial agreement between two parties to exchange principal amounts and interest payments in different currencies over a specified period.
A derivative is a financial contract whose value is dependent on, or derived from, the value of an underlying asset, index, or rate.
Economic risk refers to the potential for financial loss or instability that arises from changes in the broader economic environment, affecting businesses, investments, or entire economies.
An exchange rate is the value of one nation's currency expressed in terms of another nation's currency. It represents the rate at which one currency can be exchanged for another, determining how much of one currency you get in return for a unit of the other.