What is the relationship between currency exchange rates?
EXCHANGE RATE MOVEMENTS The exchange rate is constantly changing, which means the value of one currency in terms of the other is in constant flux. X!hen this relationship changes, the market speaks of one currency as strengthening or weakening vis-a-vis the second currency.
What are the different types of foreign exchange rates?
• Since any foreign exchange transaction automatically involves two currencies, two interest rates are necessary, the dominant interest rate and the secondary interest rate. Examples of the dominant /secondary interest rates would include EUR vs. USD or USD vs. JPY. • Forwards can include outrights and swaps.
What is outright rate of exchange?
Outright rate of exchange/ spot: Outright Transaction: the amount of one unit of currency expressed in terms of the other. the exchange of one currency for the other at the outright rate of exchange. 3 Confidential Treatment Requested By Lehman Brothers Holdings, Inc. LBEX-LL 3356486
What is a fixed exchange rate system?
In a fixed exchange rate system, the exchange rate between two currencies is set by government policy. There are several mechanisms through which fixed exchange rates may be maintained. Whatever the system for maintaining these rates, however, all fixed exchange rate systems share some important features.