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Unformatted text preview: ed in 1 unit, we consider it as base ccy “product” and a ccy quoted in split unit,
we consider it as term ccy or “money”.. Thus in this case, AUD is considered base or “product” and US$ is term or
“money”. It is a AUD market and people are buying or selling AUD as product and using US$ as money or price
to buy or sell one unit of AUD.) • Two levels of market:
– Retail ~ customers buy/sell forex from dealers.
– Wholesale ~ dealers buy/sell forex from other dealers in
same country or in other countries.
9 Foreign Exchange Markets
Spot vs Forward Rates
• Two key types of foreign exchange rates:
– Spot ~ whereby the agreed rate is for an
immediate transaction involving the exchange
of one currency for another ‘on the spot’
(typically 2 days settlement terms)
– Forward ~ whereby the agreed rate is to
exchange one currency for another, but at an
agreed future date.
future 10 Spot Market Quotations
• The price of a currency is expressed in terms of another
• The first currency mentioned is the price being sought (also ca...
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This document was uploaded on 02/13/2014.
- Fall '13