25556 Chapter Notes - Chapter 11: The Foreign Exchange, Commodity Currency, Spot Contract
Document Summary
By far the largest nancial market when valued by turnover. Exchange rate - the price of one currency in terms of another. Most exchange rate are in terms of the usd because of its role in foreign trade. Trade-weighted index (twi) - values the aud against an index of foreign currencies weighted according to their role in trade. Exchange rates ate important price within an economy as they determine the domestic value of: Goods and services bought and solid foreign currencies. Foreign assets and liabilities of local entities. Usually, exporters favour a low exchange rate whereas importers prefer a higher exchange rate, though businesses in general prefer a stable rate of exchange. Commodity currency - the currency being bought, is quoted rst and priced in the terms currency: e. g: aud/usd 0. 9595 - aud is the commodity, usd is the terms, the reciprocal is usd/aud. The mid-point is the halfway between the bid and o er rates e. g: 1. 1528 for above.
