Foreign exchange

AUD/NZD — The Antipodean Cross Pair How the AUD/NZD currency pair reflects diverging commodity cycles and central bank policy between Australia and New Zealand.

AUD/USD Aussie Dollar Currency pair representing Australian dollar relative to the U.S. dollar, trading as a commodity currency and major-pair proxy for risk appetite.

Australian Dollar The currency of Australia, classified as a resource currency sensitive to China trade cycles, commodity prices, and interest-rate differentials versus major currencies.

Average Daily Range of Currency Pairs Explained Average daily range (ADR) measures currency price movement intraday. Learn how majors, minors, and exotics differ and how traders use ADR to set stop losses and profit targets.

Average Rate FX Option vs Vanilla Option Average rate FX options reduce volatility cost for companies with monthly cash flows. Compare Asian options with vanilla FX options on pricing and payoff structure.

Bancor: Keynes's Proposed International Currency The bancor was John Maynard Keynes's 1944 proposal for a supranational currency to replace national reserve currencies and prevent deflationary crises in the global economy.

Base and Quote Currency The two components of a currency pair notation: the base currency is what you are buying or selling, and the quote currency is what you measure the price in.

Base Currency vs Quote Currency Convention in Forex Pairs How currency pairs are priced: the base currency comes first, the quote currency second. Learn how this convention determines how forex rates are quoted.

Basis Risk in Currency Hedging How basis risk in currency hedging creates residual exposure when hedges use related but non-identical currency pairs.

Basket Peg A fixed exchange rate regime where a currency is pegged to a weighted average of multiple foreign currencies rather than a single anchor.

Benefits of Issuing a Reserve Currency How issuing a reserve currency gives nations lower borrowing costs, seigniorage revenue, and financial-market depth—concrete advantages that accrue to the currency's anchor country.

Bid-Ask Spread in Forex The difference between the price at which a currency is bought and sold, expressed in pips, and the primary revenue source for forex brokers.

Bid-Ask Spread in Forex: What It Costs Traders How bid-ask spreads function as transaction costs in spot FX trading, what drives their width, and how to calculate effective cost per trade.

Bid-Offer (Forex) The price quotes and transaction costs in foreign exchange markets, where the bid is the price you receive when selling and the offer is the price you pay when buying.

Big Figure The integer handle of an FX rate that dealers omit when quoting pips to each other, reducing verbosity in voice and electronic dealing.

Brazilian Real The BRL as a high-yielding emerging-market currency vulnerable to commodity booms and busts, fiscal deficits, and sudden reversals in carry-trade flows.

Bretton Woods Bretton Woods was a post-WWII system of fixed exchange rates with the US dollar pegged to gold and other currencies pegged to the dollar. It lasted from 1944 until 1971, providing the framework for modern international finance.

Bretton Woods System and the Dollar as Reserve Currency How the 1944 Bretton Woods agreement anchored the US dollar as the reserve currency through gold convertibility, and what ended the arrangement in 1971.

Bretton Woods System Collapse Explained Why the Bretton Woods system collapsed: the Triffin dilemma, gold reserves depletion, and Nixon's 1971 shock ended the post-war fixed-rate dollar-gold peg.

BRICS Reserve Currency Proposal What is the BRICS reserve currency proposal? Explore the concept of a BRICS-backed reserve unit, obstacles it faces, and how it differs from SDRs.

British Pound The British pound is the currency of the United Kingdom and one of the world's oldest reserve currencies. It is the fourth-most important reserve currency and a major FX trading currency despite the UK's smaller modern economic size.

Can a Central Bank Digital Currency Achieve Reserve Status? Whether a digital currency can achieve reserve status: programmability, settlement finality, and the technical hurdles.

Canadian Dollar A commodity-linked G10 currency sensitive to oil and other commodity prices, making it a leading indicator of global risk appetite.

Capital Control Policy Government restrictions on the movement of capital and currency across borders to manage economic stability.

Carry Cost (Forex) The interest rate differential between two currencies in a forex pair, determining the cost or benefit of holding the position overnight.

Carry Trade A carry trade is a strategy of borrowing in a low-interest-rate currency and investing in a higher-interest-rate currency, profiting from the interest-rate differential. Carry trades are profitable until they unwind, often violently during crises.

Carry Trade Pairs Currency pairs selected to exploit interest-rate differentials, where investors borrow in low-yield currencies and invest in high-yield currencies.

Central Bank Reserve Diversification Strategy Why and how central banks diversify foreign exchange reserves across currencies, maturities, and asset classes to manage risk and exposure.

Central Bank Swap Lines and Reserve Currency Role How bilateral central bank swap lines extend reserve currency reach in crises and function as substitutes for official currency reserves.

Commodity Currency Pairs Currency pairs whose underlying economies depend heavily on commodity exports; often exhibit co-movement with commodity prices.

Competitive Devaluation Deliberate currency weakening to boost export competitiveness at the expense of trading partners.

Continuous Linked Settlement A multilateral netting and settlement service operated by CLS Bank that eliminates Herstatt risk by synchronising payment-versus-payment settlement for major currency pairs.

Coordinated Intervention Simultaneous foreign-exchange operations by multiple central banks to amplify market impact and counter destabilising currency moves.

Costs and Burdens of Reserve Currency Status Reserve currency status brings exorbitant privilege but also persistent deficits, loss of exchange-rate flexibility, and a duty to supply safe assets to the world.

Countercyclical FX Intervention: Leaning Against the Wind Learn how central banks use countercyclical currency intervention to slow—not stop—exchange-rate trends, smoothing volatility while accepting some depreciation.

Covered Interest Rate Parity The no-arbitrage condition stating that interest rate differentials between currencies must equal forward exchange rate premiums.

Crawling Band A hybrid exchange-rate regime that combines a pre-announced rate of crawl with a permitted fluctuation band around the moving central rate.

Crawling Peg A crawling peg is an exchange-rate system in which the pegged rate adjusts automatically at regular intervals, usually to offset inflation differentials. Instead of a sudden devaluation, the currency depreciates gradually by design.

Cross Currency Pairs: Trading Without the US Dollar Cross currency pairs exclude the USD and derive rates from two underlying USD pairs. Learn how indirect FX quotes work.

Cross Rate A cross rate is the exchange rate between two currencies that does not involve the US dollar. It is typically calculated by dividing or multiplying the dollar rates of the two currencies involved.

Cross-Currency Basis Swap Floating-for-floating swaps that exchange interest payments in two currencies, where the basis reflects the cost of synthetic currency conversion.

Cross-Currency Swap vs FX Swap: What Is the Difference? Distinguish between cross-currency swaps and FX swaps by tenor, coupon exchange, balance-sheet treatment, and which institutions rely on each.

Currency Bands and the Crawling Peg How a crawling peg adjusts exchange rates incrementally and differs from hard pegs and free floats.

Currency Basket A weighted portfolio of multiple currencies used as a reference unit for exchange-rate pegs, reserves, and hedging cross-currency exposure.

Currency Basket: How It Works Currency basket explained: a weighted portfolio of multiple currencies used by central banks and the IMF as a reference benchmark for valuation and policy.

Currency Board A currency board is an institutional arrangement that constrains a central bank to maintain a fixed exchange rate by requiring 100% reserve backing in the anchor currency. Currency boards eliminate discretionary monetary policy but prevent devaluation.

Currency Board Exit: Historical Examples and Outcomes Currency boards have been dismantled only a handful of times. Learn how Argentina, Estonia, and Bulgaria exited—or tried to—and what determines success.

Currency Board vs Central Bank Currency board fixed-rate mandates vs central bank flexibility: constraints, advantages, and crisis resilience.

Currency Carry Trade Explained Learn how a currency carry trade works: borrowing in low-rate currencies to invest in high-yield assets, the mechanics, funding currencies, and unwinding risks.

Currency Composition of Official Foreign Exchange Reserves (COFER) COFER tracks how central banks allocate their foreign exchange reserves across currencies, revealing shifts in reserve diversification and confidence in global currency hierarchies.

Currency Contagion: How FX Crises Spread Across Borders How currency crises spread between countries: the transmission channels, contagion mechanisms, and why one nation's devaluation can trigger capital flight elsewhere.

Currency Correlation The degree to which two currency pairs move together, driven by shared economic factors, and used by traders to manage portfolio risk and identify diversification.

Currency Correlation in Forex Trading Currency correlation in forex: how currency pairs move together (positively or negatively). Traders use correlation to avoid unintended overlap and size positions.

Currency Crisis A sudden, sharp depreciation or forced devaluation when markets lose confidence in a currency's sustainability or its peg to another currency.

Currency Crisis Early Warning Indicators Early warning indicators of currency crisis include reserve depletion, real exchange-rate overvaluation, excess credit growth, and current-account deficits—measured before the collapse.

Currency Crisis vs Balance of Payments Crisis Distinguish currency crises from balance of payments crises: causes, triggers, and policy responses differ, though one often triggers the other.

Currency Depreciation A market-driven decline in a currency's value relative to other currencies, reflecting shifts in demand, interest rates, and economic fundamentals.

Currency Devaluation A government's deliberate downward adjustment of a currency's official fixed rate against another currency or gold standard.

Currency Fixing Official benchmark exchange rates set daily by central banks and market panels, used to value international contracts and settle trades.

Currency Future A currency future is an exchange-traded contract to buy or sell a specific quantity of one currency for another at a predetermined price and date. Futures are standardized, margin-based, and settle daily. They are the exchange-traded alternative to OTC forwards.