Transactions in FOREX Market Spot transaction Forward transaction Swap transaction
Transactions in FOREX Market ◼ Spot transaction ◼ Forward transaction ◼ Swap transaction
Spot Transaction a FOREX term indicating settlement will occur in two business days time
Spot Transaction A FOREX term indicating settlement will occur in two business days time
Forward Transaction Delivery at a future date of the specified amount of one currency for a specified amount of another currency. Exchange rate is established at the time of contract but payment and delivery not required until maturity, eg 1, 2, 3, 6, 12 months time
Forward Transaction ◼ Delivery at a future date of the specified amount of one currency for a specified amount of another currency. ◼ Exchange rate is established at the time of contract but payment and delivery not required until maturity, eg 1, 2, 3, 6, 12 months time
Swap Transaction Simultaneous sale (or purchase) of spot foreign exchange against a forward purchase (or sale) of approximately an equal amount of the foreign currency Swaps account for about 56% of interbank FOREX trading
Swap Transaction ◼ Simultaneous sale (or purchase) of spot foreign exchange against a forward purchase (or sale) of approximately an equal amount of the foreign currency. ◼ Swaps account for about 56% of interbank FOREX trading
FOREX Rates and Quotes The vehicle currency (or unit currency is the currency being traded 1 AUD/0.5185 USD, the AUD is being traded and is the unit currency 1 USD/1.9286 AUD, the USd is the unit currency
FOREX Rates and Quotes ◼ The vehicle currency (or unit currency) is the currency being traded. ◼ 1 AUD/0.5185 USD, the AUD is being traded and is the unit currency. ◼ 1 USD/1.9286 AUD, the USD is the unit currency