A type of foreign exchange loan agreement that was a precursor to currency swaps. A parallel loan involves two parent companies taking loans from their respective national financial institutions and then lending the resulting funds to the other company's subsidiary. |||For example, ABC, a Canadian company, would borrow Canadian dollars from a Canadian bank and XYZ, a French company, would borrow euros from a French bank. Then ABC would lend the Canadian funds to XYZ's Canadian subsidiary and XYZ would lend the euros to ABC's French subsidiary.The first parallel loans were implemented in the 1970s in the United Kingdom in order to bypass taxes that were imposed to make foreign investments more expensive.
The name given to the group of banks contributing to the EURIBOR. This group is made up of the largest participants within the Euro money market. |||Panel bank institutions transact the largest volumes within the Euro market and provide stability and liquidity. Furthermore, these banks are located both inside and outside of Europe, and aren't always associated with regions recognizing the EU.
In currencies, this is the abbreviation for the Panama Balboa. |||The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion.
The currency abbreviation or currency symbol for the Panamanian balboa (PAB), the currency of Panama. The Panamanian balboa is made up of 100 centesimo and is often represented by the symbol B/. or B. The Panamanian balboa is a currency made up completely of coins. The United States dollar (USD) banknotes are the only paper currency in circulation. |||The Panamanian balboa replaced the Columbian peso shortly after the country claimed independence in 1904. Since this time, the balboa has been on a fixed peg with the USD at par.
The buying or selling of currencies between 9pm and 8am local time. This type of transaction occurs when an investor takes a position at the end of the trading day in a foreign market that will be open while the local market is closed. The trade will be executed sometime that evening or early morning. |||For example, the forex market trades 24 hours a day in exchanges around the world. The overlap of trading hours between North American, Australia, Asia and European currency exchanges makes this possible. However, investors must be aware of the significant level of risk involved with trading overnight, which includes foreign-exchange risk and overnight delivery risk.
Trading positions not closed by the end of the trading day and held overnight. For securities trading, overnight positions expose the investor to risk because a number of events can negatively impact a position while the trading floor is closed. |||In forex trades, 5pm EST is considered the end of the trading day. Positions opened at 4:59pm EST and closed at 5:01pm EST are considered overnight positions because a new "day" begins after 5pm. Rollover interest is paid out or received on overnight positions based on the closing interest rate.
The number of currency positions a trader can carry over from one trading day until the next. The central bank that regulates the bank or financial institution where the positions are held sets the overnight limit. These limits are reviewed on an ongoing basis. |||Overnight limits are preventative measures enacted by central banks to keep financial institutions from accumulating more currency exposure than can be hedged by the close of the trading day. This also has the effect of making financial institutions keep a closer eye on exposure to exchange rate movements throughout the day. Central banks can also set intraday limits to mitigate risk in the foreign exchange market.
A form of arbitrage involving the rearrangement of a bank's cash by taking its local currency and depositing it into eurobanks. The interest rate will be higher in the interbank market, which will enable the bank to earn more on the interest it receives for the use of its cash. |||Outward arbitrage works because it allows the bank to lend for more abroad then it could in the local market. For example, assume an American bank goes to the interbank market to lend at the higher eurodollar rate. Money will be shifted from an American bank's branch within the U.S. to a branch located outside of the U.S. The bank will earn revenues on the spread between the two interest rates. The larger the spread, the more will be made.
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