K
Malawi
Kwachas
MXN
Mexico
Pesos
MYR
Malaysia
Ringgits
MZM
Mozambique
Meticais
NAD
Namibia
Dollars
NGN
Nigeria
Nairas
NIO
Nicaragua
Gold Cordobas
NOK
Norway
Krone
NPR
Nepal
Nepal Rupees
NZD
New Zealand
Dollars
OMR
Oman
Rials
Appendix A
TABLE A.1PAB
157
(continued)
Panama
Balboa
PEN
Peru
Nuevos Soles
PGK
Papua New Guinea
Kina
PHP
Philippines
Pesos
PKR
Pakistan
Rupees
PLN
Poland
Zlotych
PYG
Paraguay
Guarani
QAR
Qatar
Rials
ROL
Romania
Lei
RUR
Russia
Rubles
RWF
Rwanda
Rwanda Francs
SAR
Saudi Arabia
Riyals
SBD
Solomon Islands
Dollars
SCR
Seychelles
Rupees
SDD
Sudan
Dinars
SEK
Sweden
Kronor
SGD
Singapore
Dollars
SHP
Saint Helena
Pounds
SIT
Slovenia
Tolars
SKK
Slovakia
Koruny
SLL
Sierra Leone
Leones
SOS
Somalia
Shillings
SPL
Seborga
Luigini
SRG
Suriname
Guilders
STD
São Tome, Principe
Dobras
SVC
El Salvador
Colones
SYP
Syria
Pounds
SZL
Swaziland
Emalangeni
THB
Thailand
Baht
TJS
Tajikistan
Somoni
TMM
Turkmenistan
Manats
TND
Tunisia
Dinars
TOP
Tonga
Pa’anga
TRL
Turkey
Liras
TTD
Trinidad, Tobago
Dollars(continued on next page)
APPENDIX A
158
TABLE A.1
(continued)
TVD
Tuvalu
Tuvalu Dollars
TWD
Taiwan
New Dollars
TZS
Tanzania
Shillings
UAH
Ukraine
Hryvnia
UGX
Uganda
Shillings
USD
United States of America
Dollars
UYU
Uruguay
Pesos
UZS
Uzbekistan
Sums
VEB
Venezuela
Bolivares
VND
Viet Nam
Dong
VUV
Vanuatu
Vatu
WST
Samoa
Tala
XAF
Communauté FinancièreAfricaine
Francs
XAG
Silver
Ounces
XAU
Gold
Ounces
XCD
East Caribbean
Dollars
XDR
International Monetary Fund
Special Drawing Rights
XOF
Communauté FinancièreAfricaine
Francs
XPD
Palladium
Ounces
XPF
Comptoirs Français duPacifique
Francs
XPT
Platinum
Ounces
YER
Yemen
Rials
YUM
Yugoslavia
New Dinars
ZAR
South Africa
Rand
ZMK
Zambia
Kwacha
ZWD
Zimbabwe
Zimbabwe Dollars
Appendix B
Exchange Rates
T
able B.1 shows the foreign exchange rates on 7/1/2004 compared withthe USD.
TABLE B.1
Exchange Rates
ISO Currency
USD/Unit
Units/USD
TRL
Turkish Lira
0.0000
1428571
ROL
Romanian Leu
0.0000
33333.3
IDR
Indonesian Rupiah
0.0001
8695.65
ZMK
Zambian Kwacha
0.0002
4739.33
VEB
Venezuelan Bolivar
0.0005
1923.07
LBP
Lebanese Pounds
0.0007
1512.85
KRW
South Korean Won
0.0009
1155.34
CLP
Chilean Pesos
0.0016
623.441
SDD
Sudan Dinar
0.0038
263.157
HUF
Hungarian Forint
0.0048
210.084
JPY
Japanese Yen
0.0092
108.607
ISK
Icelandic Krona
0.0136
73.7463(continued on next page)
159
APPENDIX B
160
TABLE B.1
(continued)
ISO Currency
USD/Unit
Units/USD
DZD
Algerian Dinars
0.0141
70.9220
JMD
Jamaican Dollars
0.0167
60.0601
PKR
Pakistani Rupees
0.0175
57.2738
PHP
Filipino Pesos
0.0180
55.6793
INR
Indian Rupees
0.0223
44.7828
THB
Thai Bhat
0.0250
40.0000
SKK
Slovakian Koruna
0.0296
33.7838
TWD
Taiwanese Dollars
0.0298
33.6022
RUR
Russian Rubles
0.0345
29.0189
CZK
Czech Koruna
0.0367
27.2480
MXP
Mexican Pesos
0.0871
11.4806
CNY
Chinese Renminbi
0.1208
8.2781
HKD
Hong Kong Dollars
0.1282
7.8004
SEK
Swedish Krona
0.1340
7.4623
NOK
Norway Kroner
0.1445
6.9208
EGP
Egyptian Pounds
0.1618
6.1805
TTD
Trinidad/Tobago Dollars
0.1626
6.1501
ZAR
South African Rand
0.1637
6.1104
DKK
Danish Kroner
0.1650
6.0611
ILS
Israeli New Shekels
0.2236
4.4728
PLZ
Polish Zloty
0.2510
3.9811
MYR
Malaysian Ringgit
0.2632
3.7994
SAR
Saudi Arabian Riyal
0.2666
3.7503
BRL
Brazilian Real
0.3381
2.9577
ARP
Argentinean Pesos
0.3515
2.8450
BBD
Barbados Dollars
0.5025
1.9900
FJD
Fiji Dollars
0.5670
1.7637
SGD
Singapore Dollars
0.5834
1.7141
BGL
Bulgarian Lev
0.6133
1.6305
NZD
New Zealand Dollars
0.6464
1.5470
AUD
Australian Dollars
0.7128
1.4029
CAD
Canadian Dollars
0.7543
1.3257
CHF
Swiss Francs
0.8097
1.2351
Appendix B
TABLE B.1
161
(continued)
ISO Currency
USD/Unit
Units/USD
SD
Bahamas Dollars
1.0000
1.0000
BMD
Bermudan Dollars
1.0000
1.0000
USD
United States Dollars
1.0000
1.0000
EUR
Eurocurrency
1.2309
0.8124
JOD
Jordanian Dinar
1.4129
0.7080
GBP
United Kingdom Pounds
1.8031
0.5464
CYP
Cyprus Pounds
2.0375
0.4908
Rates quoted from the Bank of Montréal and ExchangeRate.com.
Appendix C
Euro Currency Unit
n January 1, 1999, eleven of the countries in the European Economicand Monetary Union (EMU) decided to give up their own currenciesand adopt the new Euro (EUR) currency: Austria, Belgium, Finland,France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, andSpain. Greece followed suit on January 1, 2001. The Vatican City also participated in the changeover. This changeover is now complete.It is worth noting that any place that previously used one or more of thecurrencies listed below has now also adopted the Euro. This applies to thePrincipality of Andorra, the Principality of Monaco, and the Republic of SanMarino. This of course applies automatically to any territories, departments,possessions, or collectivities of Euro-zone countries, such as the Azores, BalearicIslands, the Canary Islands, Europa Island, French Guiana, Guadeloupe, Juande Nova, the Madeira Islands, Martinique, Mayotte, Réunion, Saint-Martin,Saint Pierre, and Miquelon, to name just a few.Euro bank notes and coins began circulating in the above countries onJanuary 1, 2002. At that time, all transactions in those countries were valued inEuro, and the “old” notes and coins of these countries were gradually withdrawnfrom circulation. The precise dates that each “old” currency ceased being legaltender are noted in Table C.1.For convenience, and because their values are now irrevocably set againstthe Euro as listed in Table C.1, the XE.com Universal Currency Converter willcontinue to support these units even after their withdrawal from circulation. In
O
163
APPENDIX C
164TABLE C.1
Official Fixed Euro Rates for Participating Countries
Legacy (Old) Currency
Conversion to Euro
Conversion from Euro
ATS
Austria
Schilling
ATS / 13.7603 = EUR
EUR × 13.7603 = ATS
BEF
Belgium
Franc
BEF / 40.3399 = EUR
EUR × 40.3399 = BEF
DEM
Germany
Mark
DEM / 1.95583 = EUR
EUR × 1.95583 = DEM
ESP
Spain
Peseta
ESP / 166.386 = EUR
EUR × 166.386 = ESP
FIM
Finland
Markka
FIM / 5.94573 = EUR
EUR × 5.94573 = FIM
FRF
France
Franc
FRF / 6.55957 = EUR
EUR × 6.55957 = FRF
GRD
Greece
Drachma
GRD / 340.750 = EUR
EUR × 340.750 = GRD
IEP
Ireland
Punt
IEP / 0.787564 = EUR
EUR × 0.787564 = IEP
ITL
Italy
Lira
ITL / 1936.27 = EUR
EUR × 1936.27 = ITL
LUF
Luxembourg
Franc
LUF / 40.3399 = EUR
EUR × 40.3399 = LUF
NLG
Netherlands
Guilder
NLG / 2.20371 = EUR
EUR × 2.20371 = NLG
PTE
Portugal
Escudo
PTE / 200.482 = EUR
EUR × 200.482 = PTE
VAL
Vatican City
Lira
VAL / 1936.27 = EUR
EUR × 1936.27 = VAL
addition, most outgoing Euro currencies will still be physically convertible atspecial locations for a period of several years. For details, refer to the officialEuro site, www.europa.eu.int/euro.Also note that the Euro is not just the same thing as the former EuropeanCurrency Unit (or “ECU”), which used to be listed as “XEU”. The ECU was atheoretical “basket” of currencies rather than a currency itself, and no “ECU”bank notes or coins ever existed. At any rate, the ECU has been replaced by theEuro, which is a bona fide currency.A note about spelling and capitalization: the official spelling of the EURcurrency unit in the English language is “euro”, with a lower case “e.” However,the overwhelmingly prevailing industry practice is to spell it “Euro,” with a capital “E.” Since other currency names are capitalized in general use, doing so helpsdifferentiate the noun “Euro,” meaning EUR currency, from the more generaladjective “euro,” meaning anything even remotely having to do with Europe.
Appendix D
Time Zones andGlobal Banking Hours
he following table emphasizes the importance of the effect of time ofday on FOREX market activity and volatility based on hours of operation around the globe. The top row is Greenwich Mean Time expressed in24-hour military format. Banking hours are arbitrarily assumed to be 9:00 AMto 4:00 PM around the globe. See Figure D.1
T
FIGURE D.1
Global banking hours.
165
166
APPENDIX D
Examples of chart usage are:• Locate Denver (row 6, or GMT less 7 hours). The first darkened cell inthis row indicates when Denver banks open relative to other worldbanks.• Move upward to top row to see that the concurrent time in London is17:00 or 5:00 PM, where British banks are now closed.• A FOREX trader in New York must trade between 3:00 AM to 11:00 AMEastern Standard Time in order to follow the heightened activityin central European markets (GMT+1: Zurich, Frankfurt, Vienna,Copenhagen).• San Francisco banks are closing while Sidney banks are opening, andso on.The darkened areas in Figure D.1 accentuate the major banking centers.FOREX is a 24-hour market. You can trade 24 hours a day.
Appendix E
Central Banks andRegulatory Agencies
brief history of currency regulation is provided in Chapter 2 of thisbook. Traders interested in more details may visit the Web sites listed inTable E.1.The complete text of the “Commodity Futures Modernization Act 2000”in Adobe PDF format can be accessed at the following Web site: www. cftc.gov/
A
files/ogc/ogchr5660.pdf.
Table E.2 is a list of affiliated central banks by country.TABLE E.1
Regulatory Agencies
Federal Reserve System
www.federalreserve.gov
Federal Reserve Bank
www.ny.frb.org
Securities and ExchangeCommission
www.sec.gov
Commodity Futures TradingCommission
www.cftc.gov
National Futures Association
www.nfa.futures.org
Financial Services Authority
www.fsa.gov.uk
Australian Securities & InvestmentsCommission
www.asic.gov.au/asic/asic.nsf
Bank of International Settlements
www.bis.org
Regulation in Canada
www.ida.ca/Investors/SecRegulation_en.asp
167
168
APPENDIX E
TABLE E.2
Central Banks
Argentina
Banco Central de la Republica Argentina
Armenia
Central Bank of Armenia
Aruba
Centrale Bank van Aruba
Australia
Reserve Bank of Australia
Austria
Oesterreichische Nationalbank
Bahrain
Bahrain Monetary Agency
Belgium
Banque Nationale de Belgique
Benin
Banque Centrale des Etats de l’Afrique de l’Ouest
Bolivia
Banco Central de Bolivia
Bosnia
Central Bank of Bosnia and Herzegovina
Botswana
Bank of Botswana
Brazil
Banco Central do Brasil
Bulgaria
Bulgarian National Bank
Burkina Faso
Banque Centrale des Etats de l’Afrique de l’Ouest
Canada
Bank of Canada
Chile
Banco Central de Chil
China
Peoples Bank of China
Colombia
Banco de la Republic
Costa Rica
Banco Central de Costa Rica
Côte d’Ivoire
Banque Centrale des Etats de l’Afrique de l’Ouest
Croatia
Croatian National Bank
Cyprus
Central Bank of Cyprus
Czech Republic
Ceska Narodni Banka
Denmark
Danmarks Nationalbank
East Caribbean
The East Caribbean Central Bank
Ecuador
Banco Central del Ecuador
Egypt
Central Bank of Egypt
El Salvador
The Central Reserve Bank of El Salvador
Estonia
Eesti Pank
European Union
European Central Bank
Finland
Suomen Pankki
France
Banque de France
Germany
Deutsche Bundesbank
Greece
Bank of Greece
Appendix E
TABLE E.2Guatemala
169
(continued)
Banco de Guatemala
Guinea Bissau
Banque Centrale des Etats de l’Afrique de l’Ouest
Hong Kong
Hong Kong Monetary Authority
Hungary
National Bank of Hungary
Iceland
Central Bank of Iceland
India
Reserve Bank of India
Indonesia
Bank of Indonesia
Ireland
Central Bank of Ireland
Israel
Bank of Israel
Italy
Banca d’Italia
Jamaica
Bank of Jamaica
Japan
Bank of Japan
Jordan
Central Bank of Jordan
Kenya
Central Bank of Kenya
Korea
Bank of Korea
Kuwait
Central Bank of Kuwait
Latvia
Bank of Latvia
Lebanon
Banque du Liban
Lithuania
Lietuvos Bankas
Luxembourg
Banque Centrale du Luxemburg
Macedonia
National Bank of the Republic of Macedonia
Malaysia
Bank Negara Malaysia
Mali
Banque Centrale des Etats de l’Afrique de l’Ouest
Malta
Central Bank of Malta
Mauritius
Bank of Mauritius
Mexico
Banco de Mexico
Moldova
The National Bank of Moldova
Mozambique
Bank of Mozambique
Namibia
Bank of Namibia
Netherlands
De Nederlandsche Bank
Netherlands Antilles
Bank van de Nederlandse Antillen
New Zealand
Reserve Bank of New Zealand
Niger
Banque Centrale des Etats de l’Afrique de l’Ouest
Norway
Norges Bank(continued on next page)
170
APPENDIX E
TABLE E.2
(continued)
Paraguay
Banco Central del Paraguay
Peru
Banco Central de Reserva del Peru
Poland
National Bank of Poland
Portugal
Banco de Portugal
Qatar
Qatar Central Bank
Romania
National Bank of Romania
Russia
Central Bank of Russia
Saudi Arabia
Saudi Arabian Monetary Agency
Senegal
Banque Centrale des Etats de l’Afrique de l’Ouest
Singapore
Monetary Authority of Singapore
Slovakia
National Bank of Slovakia
Slovenia
Bank of Slovenia
South Africa
The South African Reserve Bank
Spain
Banco de España
Sri Lanka
Central Bank of Sri Lanka
Sweden
Sveriges Riksbank
Switzerland
Schweizerische Nationalbank
Tanzania
Bank of Tanzania
Thailand
Bank of Thailand
Togo
Banque Centrale des Etats de l’Afrique de l’Ouest
Trinidad and Tobago
Central Bank of Trinidad and Tobago
Tunisia
Banque Centrale de Tunisie
Turkey
Türkiye Cumhuriyet Merkez Bankasi
Ukraine
National Bank of Ukraine
United Kingdom
Bank of England
United States
Board of Governors of the Federal Reserve System
Zambia
Bank of Zambia
Zimbabwe
Reserve Bank of Zimbabwe
Central bank Web sites may be found at www.bis.org/cbanks.htm.
Appendix F
Resources
PeriodicalsThough the following monthly magazines focus on very specific material, eachfrequently prints very informative and timely articles on the FOREX marketplace:Active Trader (TechInfo, Inc.)—www.activetradermag.comFutures (Futures Magazine, Inc.)—www.futuresmag.comTechnical Analysis of Stocks & Commodities (Technical Analysis, Inc.)—www.traders.com
BooksThe following list, though in no way complete, provides traders with FOREXlibrary essentials:Henderson, Callum, Currency Strategy (Wiley) 2002.Klopfenstein, Gary, Trading Currency Cross Rates (Wiley) 1993.Louw, G. N., Begin Forex (FXTrader) 2003.
171
172
APPENDIX F
Luca, Cornelius, Technical Analysis Applications in the Global Currency Markets(Prentice Hall) 2000.Luca, Cornelius, Trading in the Global Currency Markets (Prentice Hall) 2000.Murphy, John, Intermarket Financial Analysis (Wiley) 1999.Murphy, John, Technical Analysis of the Financial Markets (Prentice Hall) 1999.Reuters Limited, An Introduction to Foreign Exchange and Money Markets(Reuters Financial Training) 1999.Shamah, Shani, A Foreign Exchange Primer (Wiley) 2003.There are hundreds (if not thousands) of books pertaining specifically totechnical analysis. A few of the most well-known are:Aby, Carroll D, Jr., PhD, Point and Figure Charting (Traders Press) 1996.Bickford, Jim, Chart Plotting Algorithms for Technical Analysts (Syzygy) 2002.McGee, John, Technical Analysis of Stock Trends (American ManagementAssociation) 2001.Nison, Steve, Japanese Candlestick Charting Techniques (Hall) 2001.A fine resource for finding more titles is http://www.traderspress.com.
Web SitesWe encourage the trader to visit the following Web sites for additional information on trading currencies. These sites are provided for research purposes. Theamount of information on currency trading now on the Internet is enormous: AGoogle search finds over 2.2 million entries for “forex.” Inclusion herein doesnot represent an endorsement of any kind.Online Brokers and Dealerswww.cbfx.comwww.ac-markets.comwww.refcofx.comwww.saxobank.comwww.gftforex.com
Appendix F
173
www.hotspotfx.comwww.cmc-forex.comwww.cms-forex.comwww.oanda.comwww.sbfx.comwww.fxall.comDataozforex.tradesecuring.com/misc/ozchart.aspwww.csidata.comwww.forexcapital.com/database.htmwww.olsendata.comdisktrading.is99.com/disktradingwww.cqg.com/products/datafactory.cfmwww.datastream.com/www.tenfore.com/index.php?T4_Session=9b7d26531b2829babdb317083f8fe994www.dukascopy.comwww.netdania.comwww.pctrader.comChartswww.esignal.comwww.dynexcorp.com/charts/eu1h.shtmlwww.forex-markets.com/javacharts.htmwww.fxstreet.com/nou/graph/senseframeschartsnetdania.aspwww.forexcharts.com/www.fxtrek.comwww.moneytec.comwww.global-view.com/beta/
174
APPENDIX F
www.fxstreet.comwww.forexdirectory.netwww.forex-markets.comwww.hantec.com.hkwww.business.com/directory/financial_services/investment_banking_and_ brokerage/sales_and_trading/foreign_exchangePortals and Forumswww.moneytec.comwww.investorsresource.infowww.global-view.com/betawww.fxstreet.comwww.forexdirectory.netwww.forexvision.comSoftware Developmentwww.snapdragon.co.ukwww.commtools.comLink Pageswww.dynexcorp.com/links.shtmlwww.forexdirectory.netwww.forex-brokers-list.comwww.investorsresource.info/portal.htmMichael Archer’s Web site offers an extensive, categorized “FOREX on theInternet” report:www.commtools.com/p-online.html
Glossary
appreciation a currency is said to appreciate when it strengthens in price in responseto market demand.arbitrage the purchase or sale of an instrument and simultaneous taking of an equaland opposite position in a related market, in order to take advantage of small price differentials between markets.ask price the price at which the market is prepared to sell a specific currency in a foreign exchange contract or cross currency contract. At this price, the trader can buy thebase currency. In the quotation, it is shown on the right side of the quotation. For example, in the quote USD/CHF 1.4527/32, the ask price is 1.4532; meaning you can buyone U.S. dollar for 1.4532 Swiss francs.at best an instruction given to a dealer to buy or sell at the best rate that can beobtained.at or better
an order to deal at a specific rate or better.
balance of trade the value of a country’s exports minus its imports.bar chart a type of chart that consists of four significant points: the high and the lowprices, which form the vertical bar, the opening price, which is marked with a small horizontal line to the left of the bar, and the closing price, which is marked with a smallhorizontal line to the right of the bar.base currency the first currency in a currency pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHFrate equals 1.6215, then one USD is worth CHF 1.6215. In the FX markets, the U.S.dollar is normally considered the base currency for quotes, meaning that quotes areexpressed as a unit of $1 USD per the other currency quoted in the pair. The primaryexceptions to this rule are the British pound, the Euro, and the Australian dollar.bear market
a market distinguished by declining prices.
bid price the bid is the price at which the market is prepared to buy a specific currency in a foreign exchange contract or cross currency contract. At this price, the tradercan sell the base currency. It is shown on the left side of the quotation. For example, inthe quote USD/CHF 1.4527/32, the bid price is 1.4527, meaning you can sell one U.S.dollar for 1.4527 Swiss francs.bid/ask spread
the difference between the bid and offer price.
175
GLOSSARY
176
big figure quote dealer expression referring to the first few digits of an exchange rate.These digits are often omitted in dealer quotes. For example, a USD/JPY rate might be117.30/117.35, but it would be quoted verbally without the first three digits, that is“30/35.”book in a professional trading environment, a “book” is the summary of a trader’s ordesk’s total positions.broker an individual or firm that acts as an intermediary, putting together buyers andsellers for a fee or commission. In contrast, a dealer commits capital and takes one sideof a position, hoping to earn a spread (profit) by closing out the position in a subsequenttrade with another party.Bretton Woods agreement of 1944 an agreement that established fixed foreignexchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasteduntil 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.bull market
a market distinguished by rising prices.
bundesbank
germany’s Central Bank.
cable trader jargon referring to the sterling/U.S. dollar exchange rate, so calledbecause the rate was originally transmitted via a transatlantic cable beginning in the mid1800s.candlestick chart a chart that indicates the trading range for the day as well as theopening and closing price. If the open price is higher than the close price, the rectanglebetween the open and close price is shaded. If the close price is higher than the openprice, that area of the chart is not shaded.cash market the market in the actual financial instrument on which a futures oroptions contract is based.central bank a government or quasi-governmental organization that manages a country’s monetary policy. For example, the U.S. central bank is the Federal Reserve, and theGerman central bank is the Bundesbank.chartist an individual who uses charts and graphs and interprets historical data to findtrends and predict future movements. Also referred to as technical trader.cleared funds
funds that are freely available, sent in to settle a trade.
closed position exposures in foreign currencies that no longer exist. The process toclose a position is to sell or buy a certain amount of currency to offset an equal amountof the open position. This will “square” the position.clearing
the process of settling a trade.
collateral something given to secure a loan or as a guarantee of performance.commission a transaction fee charged by a broker.confirmation a document exchanged by counterparts to a transaction that states theterms of said transaction.
Glossary
177
contagion the tendency of an economic crisis to spread from one market to another.In 1997, political instability in Indonesia caused high volatility in its domestic currency,the Rupiah. From there, the contagion spread to other Asian emerging currencies, andthen to Latin America, and is now referred to as the “Asian Contagion.”contract
the standard unit of trading.
counter currency
the second listed currency in a currency pair.
counterparty one of the participants in a financial transaction.country risk risk associated with a cross-border transaction, including, but not limited to, legal and political conditions.cross currency pair a foreign exchange transaction in which one foreign currency