Forex Definitions

Eurodollars

US dollar deposits placed with banks outside the US. Holders may include individuals, companies, banks, and central banks. See also: Trading Eurodollars

Eurocurrency

Certificates of Deposit (CDs), bonds, deposits, or any capital market instrument issued outside of the national boundaries of the currency in which the instrument is denominated (for example, Eurodollars, Euro-Swiss francs, or Euroyen).

Base Currency

In the world of forex trading the base currency refers to the first currency in a currency pair such as eur/usd. See also: Counter Currency

Euro

The official currency of most members of the European Union.

Asian Dollars

Asian Dollars refers to the New Zealand and Australian Dollars. The NZD and AUD are also referred to as commodity currencies.

Kiwi

In the world of foreign exchange (forex) trading, Kiwi is slang for the New Zealand Dollar.

Interbank Market

There is no physical or centralized exchange in the forex market as seen in the stocks and futures markets. Multiple market makers are used (unlike the specialist system used by the NYSE). The forex market operates in a similar way to Nasdaq – and is also referred to as an over-the-counter (OT

Interbank Currency Market

Over 1 trillion dollars is traded daily (and nightly) in the 24 hour world spanning foreign exchange market. The majority of these transactions take place on the interbank currency market rather than on an exchange. The market provides a means for companies to hed

Herstatt Risk

The risk of loss in foreign exchange transactions and cross-currency transactions whereby one party will deliver but the counterparty financial institution will fail to complete it’s end of the contract. Also known as settlement risk or counterparty risk.