CAIIB · BFM

1 A BFM EXCHANGE RATES AND FOREX BUSINESS

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What is an exchange rate?

An exchange rate is the price at which one currency can be exchanged for another. It determines how much of one currency is needed to purchase a unit of another currency.

What is the TT (Telegraphic Transfer) rate used for in forex?

Rate used for wire transfers with no physical currency movement.

What is the difference between a direct quote and an indirect quote?

A direct quote expresses the domestic currency per unit of foreign currency (e.g., INR per USD), while an indirect quote expresses the foreign currency per unit of domestic currency (e.g., USD per INR).

What is the difference between TT buying and TT selling rate?

TT buying is bank's rate to buy forex; TT selling is rate to sell forex.

What is a spot exchange rate?

A spot exchange rate is the rate at which a currency can be bought or sold for immediate delivery, typically settled within two business days of the transaction date.

What is a clean bill rate in foreign exchange?

Rate applied to bills drawn without shipping documents attached.

What is a forward exchange rate?

A forward exchange rate is a rate agreed upon today for the exchange of currencies at a specified future date, used to hedge against exchange rate risk.

What is a documentary bill in forex transactions?

A bill of exchange accompanied by shipping documents like bill of lading.

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