Glossary

The following is a list of the terms in order to simplify your orientation within the area of foreign exchange transactions.

Confirmation of an exchange transaction - the written confirmation of the transaction conditions.

Currency - funds in a foreign currency - cash.

Currency cross rate - the exchange rate between two currencies which are not the national currency (non-standard) - for example, USD/EUR.

Exchange rate - the price of one currency expressed in units of a foreign currency.

Foreign currency - funds in a foreign currency which are held in accounts in domestic or international financial institutions.

Foreign exchange market rates - so-called fixing - are designated and subsequently published by the Czech National Bank every workday at 2:30 pm and they are valid for the given day. They are used for non-commercial purposes (for example, for the valuation of liabilities and receivables in accounting).

Forward - the pre-agreed sale of a certain amount of currency at a future forward exchange rate.

Fundamental analysis - an attempt to forecast the future development of exchange rates mainly upon the basis of an analysis of macroeconomic variables (inflation, national income, the balance of payments etc.).

Hedging - the securing, for example, of an open foreign exchange operation.

IBAN - is the account number format which is used in international payments.

International money collection - the accountholder (payer) informs the bank of the account numbers of those subjects, to whom it permits the realisation of payments using money collection to the debit of its account.

Order - a terminable order from a client for the conclusion of a transaction, the realisation of which is conditional upon the fulfilment of the conditions set by the client within the agreed period.

Spot - the purchase or sale of one currency for another at the current exchange rate in the financial market at the given moment with a settlement date within two working days (T+2).

Spot rate quotation - the designation of the purchase/sale price (usually by a financial institution), also BID/ASK.

Spread - the difference between the purchase and sale of a foreign currency.

Swap - the sale of one currency for another with its subsequent repurchase at a predefined exchange rate.

SWIFT - the international code of the bank which is used during international payments in order to identify the bank.

Technical analysis - it is used to forecast the future development of an exchange rate mainly upon the basis of an analysis of macroeconomic variables (inflation, national income, the balance of payments etc.).

The transaction settlement day - the day which is designated by the contractual parties as the day for the exchange of the funds in the agreed currencies.

The daily trading period - the period generally designated for all clients from 9 am to 5 pm.

Volatility - exchange rate ambivalence, instability.