The last two digits of an exchange rate are the points or pips. The rest of the rate is called big figure. As a general rule, a pip is one-hundredth of a ‘cent’, for example USD 0.0001, EUR 0.0001, CAD 0.0001. There are exceptions: for example, when quoting the dollar/yen rate, a pip is one
Interbank spot rates are the current selling and buying prices for spot transactions. In forex trading, the way in which the exchange rate is quoted for each particular pair of currencies has become standardized around the world. However, an exchange rate may be quoted differently in the domestic market compared to the international FX market.
Spot Transaction: Definition A spot FX transaction is a purchase or sale of one currency for another, for delivery usually two business days after the dealing date (the date on which the contract is made). Value Date for Spot Transactions The exchange rate at which a spot transaction is made is the ‘spot rate’, because
Due to the huge expansion in international trade from the early 1970’s, there was a huge growth in demand for foreign currencies to settle trade transactions. The availability of currencies for trading, and so the development of the FX markets itself, was facilitated by the development of the Eurodollar/Eurocurrency market. Eurocurrency is money deposited with
The Gold Standard Until 1914, bank notes represented gold held by governments. The pound sterling, for example, was officially linked to a given amount of gold, which the Bank of England promised to pay, if so requested. Many other countries also adopted the gold standard in the 1880’s so that the value of their currencies