COMMERCE 4SA3 Chapter Notes - Chapter 9: Foreign Exchange Market, The Foreign Exchange, Petrocurrency
27 Nov 2018
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Involves the short term movement of funds from one currency to another in hope of profiting from shifts in exchange rates: not a guaranteed return you can also lose money. The world and the canadian dollar: recognized as a petrocurrency , meaning cad is linked to oil and gas that canada exports. Spot exchange rates: rate at which a foreign exchange dealer converts one currency into another currency on a particular day. Forward exchange rates: forward exchange, occurs when two parties agree to exchange currency at a specific time in the future, forward exchange rates, quoted in 30, 90 and 180 days. Currency swaps: simultaneous purchase and sale of a given amount of foreign exchange for two different value dates. Swaps are transacted between international businesses and their banks, between banks, and between governments when it is desirable to move out of one currency into another for a limited period without incurring foreign exchange risk.
