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Currency Carry Trade

A currency carry trade is a strategy whereby a high-yielding currency funds the trade with a low-yielding currency. A trader using this strategy attempts to capture the difference between the rates, which can often be substantial, depending on the amount of leverage used.The carry trade is one of the most popular trading strategies in the forex market. The most popular carry trades have involved buying currency pairs like the Australian dollar/Japanese yen and New Zealand dollar/Japanese yen because the interest rate spreads of these currency pairs have been quite high. The first step in putting together a carry trade is to find out which currency offers a high yield and which one offers a low yield.

Currency Peg

A currency peg is a policy in which a national government or central bank sets a fixed exchange rate for its currency with a foreign currency or a basket of currencies and stabilizes the exchange rate between countries.The currency exchange rate is the value of a currency compared to another. While some currencies are free-floating and rates fluctuate based on supply and demand in the market, others are fixed and pegged to another currency.Pegging provides long-term predictability of exchange rates for business planning and helps to promote economic stability.

Money Supply

The money supply is the sum total of all of the currency and other liquid assets in a country's economy on the date measured. The money supply includes all cash in circulation and all bank deposits that the account holder can easily convert to cash.Governments issue paper currency and coins through their central banks or treasuries, or a combination of both. In order to keep the economy stable, banking regulators increase or reduce the available money supply through policy changes and regulatory decisions.

Currency Exchange

A currency exchange is a licensed business that allows customers to exchange one currency for another. Currency exchange of physical money (coins and paper bills) is usually done over the counter at a teller station, which can be found in various places such as airports, banks, hotels, and resorts. Currency exchanges make money by charging a nominal fee and through the bid-ask spread in a currency.Also known as a "bureau de change" or "casa de cambio," a currency exchange should not be confused with the foreign exchange (forex) market where traders and financial institutions transact in currencies.

Demand Deposit

A demand deposit account (DDA) is a bank account from which deposited funds can be withdrawn at any time, without advance notice.

Exempt Transaction

An exempt transaction is a type of securities transaction where a business does not need to file registrations with any regulatory bodies, provided the number of securities involved is relatively minor compared to the scope of the issuer's operations and that no new securities are being issued.