Day Trading
Refers to the process of entering and closing out trades within the same day or trading session.
Dealer
One who places the order to buy or sell. A dealer differs from an agent in that it takes ownership of the asset, and thereby is exposed to some risk.
Deficit
An excess of liabilities over assets, of losses over profits, or of expenditure over income.
Delivery
Term used to describe the exchange by both parties (buyer and seller) of the traded currency.
Deposit
Refers to the process of borrowing and lending money. The deposit rate is the rate at which money can be borrowed or lent.
Depreciation
The decline in the value of an asset or currency.
Derivative
A security derived from another and whose value is dependent the underlying security from which it is derived. Examples of derivatives are future contracts, forward contracts and options. Underlying securities can include stocks, bonds or currencies. Derivatives can be traded and are usually used to hedge portfolio risk.
Devaluation
When the value of a currency is lowered against the other, i.e. it takes more units of the domestic currency to purchase a foreign currency. This differs from depreciation in that depreciation occurs through changes in demand in the foreign exchange market, whereas devaluation typically arises from government policy. A currency is usually devalued to improve the balance of trade, as exports become cheaper for the rest of the world and imports more expensive to domestic consumers.
Dirty Float (Managed Float)
An exchange rate system in which the currency is not pegged, but is “managed” by the central bank to prevent extreme fluctuations in the exchange rate. The exchange rate is managed through changes in the interest rate to attract/detract capital flows or through the buying and selling of the currency. This system is contrasted with a Pure Float in which there is no central bank intervention and the exchange rate is entirely determined by the market and speculation.
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