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Daily foreign exchange rates

Daily foreign exchange rates are once-a-day exchange rate quotes, which are used to trade currencies until the following day, when a new daily foreign exchange rate is quoted. Daily rates are used widely by businesses to conclude their cross-border payments and foreign exchange transactions. However, there is a fundamental problem with daily rates. The foreign exchange […]

Decentralised Treasury

Decentralised (as opposed to centralised) Treasury is a financial management structure, used by some multinationals in which decisions about the company’s financial operations are taken by different teams in different locations. In a decentralised treasury management system, each unit or subsidiary is responsible for its own operations and has complete independence from the central office. […]

Deflation

Deflation is an economic phenomenon involving a generalised decline in the prices of goods and services in a country or region. It is the opposite of inflation and is therefore often referred to as “negative inflation”. It occurs once the rate of inflation falls below 0%. Falling into a deflationary cycle tends to be extremely […]

Delivery date

In finance, the delivery date, also known as the settlement date, refers to the specific date on which an investment contract must be completed. Companies using financial instruments like forward or futures contracts to protect their foreign currency transactions from FX risk must meet the delivery dates established in the contracts. In futures trading, the […]

Devise de base

La devise de base est la première monnaie indiquée dans une paire de devises. La deuxième monnaie indiquée s’appelle la devise de contrepartie. Une devise est toujours cotée par rapport aux autres devises. Par exemple, l’euro est la première devise indiquée dans la paire de devises EUR/USD. La valeur de la monnaie de base est […]

Devise exotique

Il s’agit d’une devise très peu traitée et disposant d’une liquidité très faible. L’appellation « exotique » n’a rien à voir avec le pays ou la taille de la devise, des devises principales ou secondaires pouvant être classées comme devises exotiques. En général, effectuer des transactions dans une devise exotique coûte cher car leur manque […]

Dirty float

Dirty float or managed float are two terms that refer to a foreign currency regime by which a central bank intervenes in the foreign exchange markets to manipulate the balance of supply and demand in order to curb the volatility of a specific currency. Central bank interventions aim to avoid the consequences of economic shocks […]

Dollar offset method

The dollar offset method is one of the accounting procedures recognised by the international accounting standards to determine the effectiveness of a hedge relationship. Companies using derivative financial instruments to hedge their exposure to a market risk arising from underlying assets or liabilities might want to use hedge accounting to minimise income statement volatility. Such […]

Drawdown

In finance, the drawdown is a concept related to loan facilities that allow the borrower to obtain funds from a credit line during the loan period. A drawdown refers to each of the amounts the borrower accesses from the loan facility. In an open forward contract, the borrower has access to the funds during the […]

Dynamic Hedging

Dynamic Hedging is a foreign exchange management strategy that provides a flexible solution to protect investments from exchange rate risks as it allows businesses and individuals to readapt their hedging positions to evolving market conditions. The Dynamic Hedging strategy differs to more static currency management schemes as they allow to readapt the hedging rate in […]