The following offers brief explanation of the most popular terms used in the
Aggregate (Risk) Total exposure a bank has with a customer for both spot and forward contracts.
Total demand for goods and services in the economy. Aggregate demand includes private and public sector
demand for goods and services within the country, and thedemand of consumers and firms in other countries for goods
Aggregate Supply Total supply of goods and services in the economy (including imports) available to meet aggregate demand.
Agio Difference in the value between currencies. Also used to
describe percentage charges for conversion from paper
money into cash, or from a weak into a strong currency.
An option which may be exercised on any valid business
date throughout the life of the option. A European option
can only be exercised on a specific date.
Describes a currency strengthening in response to market
demand as opposed to increasing in value as a result of
A risk-free type of trading where the same instrument is
bought and sold simultaneously in two different markets in
order to cash in on the difference between the markets.
Around Used in quoting forward "premium/discount".
Ask Price The price at which the currency or instrument is offered.
Ask is the lowest price acceptable to the buyer.
The right to receive from a counterparty an amount of
currency either in regards to a balance sheet asset (e.g. a
loan), or at a specified future date in regards to an
unmatched Forward or spot deal.
The international society of foreign exchange dealers
consisting of national "Forex clubs" affiliated on a worldwide
At Best An instruction given to a dealer to buy or sell at the best
rate that is currently available in the market.
At or Better An order to deal at a specific rate or better.
At Par Forward Spread When the forward price is equivalent to the spot price.
At the Price Stop-Loss
A stop-loss order that must be executed at the requested
level regardless of market conditions.
At-the-Money An option whose strike/exercise price is equal to or near
the current market price of the underlying instrument.
Sale of an item to the highest bidder. (1) A method
commonly used in exchange control regimes for the
allocation of foreign exchange. (2) A method for allocating
government paper, such as US Treasury Bills. Small investors
are given preferential access to the bills. The average
issuing price is then computed on the basis of the
competitive bids accepted. In some circumstances, such as
government auctions, it is the yield rather than the price
which is bid.
Average Rate Option
A contract where the exercise price is based on the
difference between the strike price and the average spot
rate over the contract period. Sometimes called an "Asian