A

Accrual

The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitrage) deals, over the period of each deal.

Actualize 

The underlying assets or instruments traded in the cash market.

ADB 

Either the African Development Bank or the  Asian Development Bank.

Adjustable Peg 

an exchange rate regime where a country's exchange rate is "pegged" (i.e. fixed) in relation to another currency , often the dollar, but where the rate may be changed from time to time.  See peg and crawling peg.

Agent Bank 

(1) A bank acting for a foreign bank. (2) In the Euro market the agent bank is the one appointed by the other banks in the syndicate to handle the administration of the loan.

Aggregate Demand 

Total demand for goods and services in the economy. It includes private and public sector demand for goods and services within the country and the demand of consumers and  firms in other countries for goods and services.

Aggregate risk 

Size of exposure of a bank to a single customer for both spot and forward contracts.

Aggregate Supply 

Total supply of goods and services in the economy from domestic sources (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.

AIBOR 

Amsterdam Inter-bank Offered Rate.

American Option 

An option which may be exercised at any time prior to expiration. (European options can only be exercised on a specific date)

Appreciation 

The strengthening of a currency in response to market demand rather than through official action. 

Arbitrage 

The simultaneous purchase and sale on different markets of the same or equivalent financial instruments to profit from price or currency differentials. 

Arbitrage channel 

The range of prices within which there will be no possibility to arbitrage between the cash and futures market.

Arcru 

A unit of account based on the movement of 12 Arab currencies against the USD.

Around 

Used in quoting forward "premium/discount". "Five-five around" would mean five points on either side of the present spot value.

Asset Allocation 

Dividing instrument funds among markets to achieve diversification or maximum return. 

Article 8 Currency 

IMF terminology for a senior, freely convertible currency.

As you like option 

Enables the holder to convert from one style of option to a different style of option over a preset period of time. Sometimes referred to as either a "call-or-put option" or "chooser option".

Asian Monetary Unit 

An accounting unit for the Asian Clearing Union with the same value as an SDR.

Ask 

The price at which the currency or instrument is offered.

Asset 

In the context of foreign exchange is the right to receive from a counter party an amount of currency either in respect of a balance sheet asset (e.g. a loan) or at a specified future date in respect of an unmatched forward Forward or spot deal.

Assignment 

Notice to an option holder, usually by the clearing house of an exchange traded option that the option has been exercised.

Association Cambiste Internationale 

The international society of foreign exchange dealers consisting of national "Forex clubs" affiliated on a world wide basis.

At best 

An instruction given to a dealer to buy or sell at the best rate that can be obtained.

At or Better 

An order to deal at a specific rate or better.

At-the- money 

An option whose strike/exercise price is equal to or near the current market price of the underlying instrument.

ATHIBOR 

Athens Inter-bank Offered Rate.

Au Jour le Jour 

The rate for money lent from day to day on the French money market.

Auction 

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 for government auctions it is the yield rather than the price which is bid.

Authorized Dealer 

A financial institution or bank authorized to deal in foreign exchange.

Automated Clearing House 

A US term for an organization set up by financial institutions agreeing to initiate and receive among themselves electronic transfers of funds authorized by their customers.

Automatic exercise 

A procedure for exchange traded options under which the in-the-money options are exercised on a given date.

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 option".