Forex Glossary

This is an exchange rate regimen that involves pegging or fixing a currency’s exchange rate to that of a stronger currency, such as the Euro or US dollar. The adjustable peg rate is adjusted occasionally to improve a nation's competitive position. For instance, the Chinese currency, Yuan, is pegged to the US dollar.

Also known as systematic risk, market risk, or undiversifiable risk, is defined as the risk associated with complete aggregate market returns. Aggregate risk cannot be reduced through diversification.

When currency strengthens due to market demand rather than through official action, it is called appreciation. The worth of an asset also enhances during appreciation.

Arbitrage is the profiting that takes place from differences in the price of currency pairs traded on more than one markets.

Also called “ask price,” “offer” or “ask rate,” it is the price at which a security or currency pair is put up for sale. It is also the lowest acceptable price for a buyer.