Category: Forex

Guppy

Guppy is financial trading word (slang) which mean GBP/JPY currency pair.

Revaluation

Revaluation is a change of a currency quotations, in which case it is specifically an official rise of the value of the currency in relation to a foreign currency in a fixed exchange rate system.

Devaluation

In modern monetary policy, a devaluation is an official lowering of the value of a country’s currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency or currency basket.

Currency appreciation and depreciation

Currency depreciation is the loss of value of a country’s currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system in which no official currency value is maintained. Currency appreciation in the same context is an increase in the value of the currency.

Carry trading

The term carry trade, without further modification, refers to currency carry trade: investors borrow low-yielding currencies and lend (invest in) high-yielding currencies. It is thought to correlate with global financial and exchange rate stability and retracts in use during global liquidity shortages, but the carry trade is often blamed for rapid currency value collapse and appreciation.

A risk in carry trading is that foreign exchange rates may change in such a way that the investor would have to pay back more expensive currency with less valuable currency. In theory, according to uncovered interest rate parity, carry trades should not yield a predictable profit because the difference in interest rates between two countries should equal the rate at which investors expect the low-interest-rate currency to rise against the high-interest-rate one. However, carry trades weaken the currency that is borrowed, because investors sell the borrowed money by converting it to other currencies.

Majors

The most traded pairs of currencies in the world are called the Majors. They constitute the largest share of the foreign exchange market, about 85%, and therefore they exhibit high market liquidity.

The Majors are: EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD.

G10 currencies

The G10 currencies are 10 of the most heavily traded currencies in the world, which are also the world’s most liquid. Traders regularly buy and sell them in an open market with minimal impact on their own international exchange rates.

The origin of the term G10 currencies is not clear, however it may be derived from the G-10 countries and their agreement to participate in the IMF General Arrangements to Borrow (GAB). There is no longer a one-to-one match between the G10 currencies and the G10 countries.

The G10 currencies are the United States dollar, the euro, the Japanese yen, the British pound sterling, the Swiss franc, the Australian dollar, the New Zealand dollar, the Canadian dollar, the Swedish krona, and the Norwegian krone.

In some banking circles, reference is made to the G11 currencies, which are the G10 currencies plus the Danish krone.

FX market

The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the Credit market.