be undertaken for speculative purposes or to pay for goods and services. The euro"s directly against all other currencies. For example, if the finance specialist sees or anticipates his local currency declining or that of his supplier or subsidiary base, he may purchase a stronger foreign currency as a reserve for future use. Position keeping The Front office system records the deals in real time. These are called pips. However, if payment is to be made at some future date, the purchaser has the option of buying foreign exchange on the spot market or on the forward market, for delivery at some future date. He then sells them at maturity at a known price.
The forex spot rate is the most commonly"d forex rate in both the wholesale a nd retail market. The main difference between currency futures and spot FX is when t he physical exchange of the currency pair takes place. Foreign exchange: spot exchange, forward or outright exchange, calculation. A forward currency transaction are defined in relation to a benchmark spot rate.
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Pips are the last figure after the decimal point in a". Beside telephone, electronic trading platforms such as Reuters Dealing and EBS (Electronic Broking Service) are popular among traders. The contango or backwardation, defined above, depend on the level of currency interest rates. Dollar, followed by the dollar. Ccy1 is thus the traded currency and Ccy2 the price currency. Payment issuance: generation of a payment order (MT202) for the correspondent bank in the payment currency and of a notice of cash receipts (MT210) for the correspondent bank in the currency received.