Financial instruments

All currencies, as well as various derivative instruments

Forex tools can be divided into two categories

All currencies, as well as various derivative instruments, are classified as instruments of the Forex excange market. These are the main trading tool of Forex and their rates are determined by the supply and demand of the market or by economic and other factors. The rule is that the most liquid and convertible currencies are incorporated into Forex trading.

Forex tools can be divided into two categories.

Monetary agreements

Spot

Exchange of currencies at the latest on the second working day after the date of the agreement. This type of transaction takes place in cash at the “Over-the-Counter” (OTC) interbank market within specified exchange rates. Speculative currency transactions of banks, financial corporations and other participants in the financial market are traded in this way and account for up to 65% of Forex turnover.

Outright forwards

Exchange of currencies at a predetermined rate within a specified time horizon. This method is advantageous at unstable currency rates and is only negotiated between trading parties.

Currency Swap

Simultaneous buying and selling of currencies with different data values. As with Outright Forwards, currencies are exchanged in the future.

Derivatives

Financial instruments are derived from the main product Synthetic Agreement for Foreign Exchange – SAFE. These instruments are derivatives of Over-the-Counter (OTC) markets that act as a futures agreement. In other words, they guarantee the exchange rate for a certain period of time, which begins in the future.

Futures

These transactions provide for the exchange of currencies at a specified date at a predetermined rate.

Swap

Agreement between the buyer and the seller on the exchange of one currency for the second currency, from which each other pays interest in different currencies. In the case of bonds, the currencies are exchanged for the original ones.

Options

An agreement between the buyer and the seller giving the buyer the right, but not the obligation, to buy a certain amount of the currency at a predetermined price in a certain period of time regardless of the market price of the currency.

Leave a Reply

Your email address will not be published.

This website uses cookies. By continuing to browsing the site, you agree to our use of cookies.