FOREIGN EXCHANGE RATES
Foreign exchange rates are never stable. They move, and sometimes with dramatic rapidity.
A nominal exchange rate move is the total observed movement in the exchange rate. A real exchange rate move is the nominal rate movement adjusted for the differential in inflation.
To conduct international payments banks maintain sufficient working balances in all maior currencies.
Dealers are the people who are directly involved with day-to-day dealing in foreign exchange, the buying and selling of one currency for another at an agreed rate for delivery on specific dates into specific accounts in specified centres. They close out short and lone positions through purchases and sales and deal with profits and risks of foreign currency trading.
Forecasting of foreign exchange rates movements is not a science but an art. But there are some approaches that yield good results. The dealer must always be in the picture of bond, commodity and equity market developments. Changes in interest rates and pending deals bring about forex movements.
Market sentiment may change the situation very quickly.
Economic and financial indicators must be constantly watched to take timely decisions.
In the former days domestic considerations were of paramount importance now markets are driven by both domestic and international events. Market rumours usually precede upcoming political and economic events. If a rumour is credible the market acts accordingly and the event itself may not produce any changes in the market situation. This process is reflected in the saving «Buy the rumour, sell the fact».
Economic growth is facilitated by stable prices. The latter is the concern of central banks, which posses considerable financial resources and can reduce volatility if markets get carried away.
Limited central bank intervention at the right time may turn the market.
to adjust —
i: to 'yield results -
working balance — «рабочие» остатки средств на
счетах, средства для
to close out
- закрыть позицию
- «короткая» позиция
- «длинная» позиция
to be in the
- быть в курсе событий
e equity (market) -
- капитал, акции, фондовый
- высший, первостепенный
*3десь и далее значения слов взяты из контекста.