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6th December 2009
Unexpected gains and losses from foreign exchange risk can complicate running a company. At the moment you may be selling off currency on an ad-hoc basis and it's the first time you have considered managing the exposure what can you do? Here are 11 points that may help.
Learn about the following: How the spot market works. What the spot price is. What happens when you do a deal. How the forward rate is calculated. How dealers make money. Why customers are important.
12th October 2009
Introduction Foreign exchange is defined as "a claim to a foreign currency payable abroad and may be funds held, bills or cheques". A foreign exchange transaction is, "a contract agreed today between two parties to trade an agreed amount of one currency for an agreed amount of another currency on a future date". When you travel you may be familiar with buying currency at the airport. Because the sums involved are small and paper money is exchanged the differences between buying and selling prices can be wide. You may also be unfortunate enough to pay a dealing fee. Banks, corporates and speculators deal in the professional market. Trades are transacted across electronic platforms and each trade can run into millions of dollars. As a consequence dealing spreads are very narrow and the money is exchanged by credits and debits to bank accounts. Let's find out about the spot and forward markets and the risks involved.
Learn the following: How foreign exchange swaps work. The calculations involved. What foreign exchange swaps can be used for.