Forex Flashcards
What is Forex?
The foreign exchange (currency or forex or FX) market
refers to the market for currencies. Transactions in this
market typically involve one party purchasing a quantity of
one currency in exchange for paying a quantity of another.
What is the positive effect of currency appreciation from the trade perspective?
A currency appreciation makes imports cheaper
Name at least five factors affecting exchange rates
Inflation, interest rates, public debt, current account deficit, terms of trade, political stability & economic performance
What is Terms of trade?
Related to current accounts and balance of
payments, the terms of trade is the ratio of export
prices to import prices.
How will the discovery of diamonds in a domestic country affect the local currency?
The domestic currency will appreciate
Name five most traded currencies?
US$, JPY, Euro, GBP, CHF
What is a forward contract?
A forward contract is an agreement to buy or
sell an asset in the future at prices agreed
upon today
