(See related pages)
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| arbitrage | The purchase of securities in one market for immediate resale in another to profit from a price discrepancy. (See page(s) 304) |
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| capital flight | Residents convert domestic currency into a foreign currency. (See page(s) 317) |
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| countertrade | The trade of goods and services for other goods and services. (See page(s) 317) |
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| currency speculation | Involves short-term movement of funds from one currency to another in hopes of profiting from shifts in exchange rates. (See page(s) 298) |
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| currency swap | Simultaneous purchase and sale of a given amount of foreign exchange for two different value dates. (See page(s) 303) |
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| efficient market | A market where prices reflect all available information. (See page(s) 306) |
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| exchange rate | The rate at which one currency is converted into another. (See page(s) 296) |
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| externally convertible currency | Nonresidents can convert their holdings of domestic currency into foreign currency, but the ability of residents to convert the currency is limited in some way. (See page(s) 316) |
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| foreign exchange market | A market for converting the currency of one country into that of another country. (See page(s) 296) |
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| foreign exchange risk | The risk that changes in exchange rates will hurt the profitability of a business deal. (See page(s) 297) |
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| forward exchange | When two parties agree to exchange currency and execute a deal at some specific date in the future. (See page(s) 301) |
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| forward exchange rates | The exchange rates governing forward exchange transactions. (See page(s) 301) |
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| freely convertible currency | A country’s currency is freely convertible when the government of that country allows both residents and nonresidents to purchase unlimited amounts of foreign currency with the domestic currency. (See page(s) 316) |
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| fundamental analysis | Draws on economic theory to construct sophisticated econometric models for predicting exchange rate movements. (See page(s) 315) |
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| inefficient market | One in which prices do not reflect all available information. (See page(s) 313) |
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| International Fisher Effect | For any two countries, the spot exchange rate should change in an equal amount but in the opposite direction to the difference in nominal interest rates between countries (See page(s) 312) |
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| law of one price | In competitive markets free of transportation costs and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in the same currency. (See page(s) 306) |
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| nonconvertible currency | A currency is not convertible when both residents and nonresidents are prohibited from converting their holdings of that currency into another currency. (See page(s) 316) |
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| relatively efficient markets | One in which few impediments to international trade and investment exist. (See page(s) 306) |
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| spot exchange rate | The exchange rate at which a foreign exchange dealer will convert one currency into another that particular day. (See page(s) 301) |
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| technical analysis | Uses price and volume data to determine past trends, which are expected to continue into the future. (See page(s) 316) |