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Floating Currency Exchange Rate

Floating Exchange Rate Definition Free floating or Clean floating of a currency occurs when its exchange rates are left free to be determined by the market forces of demand for and supply of that currency in foreign exchange market with no floor or ceiling vis-à-vis the dollar, gold, SDRs, or any other currency. The government… Read More »

Control and Monitoring of Exchange Position

Control and Monitoring of Exchange Position As a matter of policy each bank establishes “limits” for various levels.in case a bank has more centers dealing in foreign exchange, the limit is allocated to each center. Such limits are periodically reviewed and revised.in the event of a special situation arising interim limits are approved for a… Read More »

CONTROL AND MONITORING OF EXCHANGE POSTIION

As a matter of policy each bank establishes “limits” for various levels.in case a bank has more centers dealing in foreign exchange, the limit is allocated to each center. Such limits are periodically reviewed and revised.in the event of a special situation arising interim limits are approved for a given transaction or a limited period.… Read More »

Difference Between Overbought and Oversold

Overbought and Oversold Overbought means that a bank’s assets and purchases of a particular foreign currency exceed its liabilities and sales of that currency. Where oversold means that a bank’s liabilities and sales in a particular foreign currency exceed the’ assets and purchases of that currency. In order to avoid risk on account of exchange… Read More »

Difference Between Interest rate and Exchange rate

Interest rates and Exchange rates The question of interest rate arises when currencies are borrowed or lent; whereas exchange rates are involved when different currencies are being bought or sold. Exchange rates are subject to more frequent fluctuations than interest rates. Interest rate is a factor that affects exchange rates. High interest rates cause speculative… Read More »

Difference Between Hedging and Speculating

Hedging and speculating Hedging means avoiding or covering foreign exchange risk. The need for hedging arises because exchange rates fluctuate continuously. Accordingly, individuals, companies and banks who expect to make or receive payments in foreign currencies at a future data face the risk of having to pay more or receiving less in domestic currency than… Read More »

Difference between Pips and Points

Pips & points: A point is a unit of decimal, the fourth place to the right of the decimal (0.0001) whereas a pip is the fifth place to the right (0.0001).  One point is one ten thousandth of a dollar thus, 100 points become one cent. Which decimal place is implied by a point varies… Read More »

How to register Domain Name?

Online Beginners Start small and spend less. Choose Your Domain Name Every website starts with a great domain name. What is a domain name? What is a TLD? Think of your domain name as a street address. If people search for your domain, they will be able to find your website. Every website on the internet has… Read More »

International Guarantees

There may be situations wherein counter-parties to the underlying trading contracts may insist that importers or exporter provide guarantees of highly reliable third parties about the ability of the importers or exporters to complete the underlying contracts, and the event of failure of the importers or exporters to do so, pay compensation to the counter-parties.… Read More »

Types of Options

There are two basic types of options: Put Option and Call Option CALL OPTION: This option gives the buyer the right to purchase or “call away” a specified amount of the underlying foreign currency at a specified price up to a specified date. The price at which the foreign currency may be bought is the… Read More »

Foreign Currency Options

We have examined the two main methods of covering an exchange rate fluctuations risk i.e. The traditional forward exchange contract, and The currency futures contract. An option is an agreement between two parties. One party grants the other the right to buy or sell an instrument under certain conditions. The instruments may be a stock,… Read More »