Foreign Exchange Markets

FX markets are open for a short period each day during which a small number of transactions are undertaken.

• True
• False

Although Australia operates a floating exchange rate regime, the Reserve Bank has sometimes intervened in the FX markets.

• Treu
• False

The Chinese government has gradually widened the range over which its currency may appreciate and depreciate relative to other currencies.

• True
• False

There are two different types of FX dealers: those that offer to buy currencies at a particular price and those that offer to sell currencies at a particular price.

• True
• False

Central banks do not usually hold any reserves of foreign currency but simply acquire it as the need arises.

• True
• False

A spot transaction is one in which an order to buy or sell a currency is placed today, at a price determined today, and with settlement of the transaction taking place two working days from today.

• True
• False

A forward FX transaction is one in which the order is placed today, at a price determined at the time of the order, but with settlement of the transaction taking place before spot.

• True
• False

If a firm were to ask a dealer for the ‘dollar euro spot’ or for the ‘euro dollar spot’, the firm will receive the same bid and offer quotes.

• True
• False

Given USD/EUR0.7250–0.7255, the FX dealer would buy USD1 from you and give you EUR0.7250.

• True
• False

A verbal quote of ‘Euro Aussie spot is one thirty-one seventy-two–eighty’ would be written as EUR/AUD1.3172–80.

• True
• False