Lect09-International Financial Markets-VineyChptr15

6755 16765 usually abbreviated to euraud1675565

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: lled base currency – may see it as “product”) The second currency is the terms currency – may see it as money) – Example: Australian dollar/euro may be expressed as EUR/AUD1.6755– 1.6765, usually abbreviated to EUR/AUD1.6755–65 (base/term = one unit/split units) Euro is the base currency and Australian dollar is the terms. Customer can sell EUR1 with AUD1.6755 Or Dealer can buy EUR1 with AUD1.6755 (Take note that EUR takes 1 unit here – base or product, and AUD takes split units, term or money here. It is more convenient to think that people are buying or selling EUR here, not buying or selling AUD as described above) Customer can buy EUR1 with AUD1.6765 Or Dealer can sell EUR1 with AUD1.6765 (More convenient, we as customers, buy or sell each unit of EUR “product” here with AUD 1.6765 or 1.6755 as price or “money”.) 11 (Customers sell low but buy high, while dealer buy low sell high of base ccy, “product”.) • Remember: – the rates are determined by (and shown with respect to) the the dealer, not the customer. dealer – when you are faced with the buying and selling rates for when a dealer: dealer: • the lower rate will always be the dealer’s rate...
View Full Document

This document was uploaded on 02/13/2014.

Ask a homework question - tutors are online