Traders Exchange

GUIDE TO DEVELOPED COUNTRIES CURRENCIES

Australia

Canada

European Union

Great Britain (United Kingdom)

Japan

New Zealand

United States

Switzerland

GUIDE TO EMERGING COUNTRIES CURRENCIES

China

The yuan, CNY, spot FX market is limited to onshore companies and financial institutions. It is not traded offshore. The USD/CNY rate is closely managed by the central bank (PBOC) at around 8.2770 currently. There have been calls for the Chinese government to revalue its currency but that has met resistance. As the government continues to reform its economic policies and strengthen its banking systems tangent to the central bank there should be a realistic call for opening up spot trading. However, this will take some time. Officially, the system is called a managed float and not a USD peg. There is no CNY forward market, only spot FX. The non deliverable forward market is not traded onshore. There is no interbank money market beyond 4 months. The bond market is restricted to designated onshore financial institutions only and is not liquid.

Czech Republic

The Czech koruna is a convertible currency that has been free floating since May 1997. Foreign investors have unrestricted access to the local markets. London banks are very active in currency trading, which is estimated to account for 60 percent of daily turnover. The deposit market is also very liquid and foreigners deal actively. Interest rate swaps (IRS) are also available up to 15 years. The market is most liquid up to 5 years. The IRS market is mostly driven by offshore banks.

Hong Kong

USD/HKD is a managed floating currency at a rate of around 7.8 HKD per USD. The normal band consists of 1 percent fluctuation allowance. There is much speculation about the possibilities of free floating this currency which will most likely coincide with and be linked to the progress and reforms of the CNY. No distinction is made between local and offshore trading. There is no NDF market. FX options are available. There are no spot or forward trading restrictions but documentation is required. There is a liquid government bond market (Exchange Fund Notes) with maturities of up to 10 years. Interest rate swaps and options are liquid up to 10 years.

Hungary

Until May 2001, the forint, HUF, was the most restricted currency in the region, managed by a crawling peg against the EUR, with .3 percent devaluation per month within a band of +/- 2.25 percent from the central parity. In May 2001, this band was widened to +/- 15 percent and in June was made fully convertible for current and capital account transactions. Though the wider band is still in operation the HUF is now essentially in a free float regime around a central parity of 276.1. Restrictions on foreign holdings of money market instruments have also been lifted allowing offshore investors to go short HUF.

India

The exchange rate of the rupee, INR, is determined in the interbank market. Since January 2000 this has been managed by the Reserve Bank of India and is classified as a managed float regime. Local and offshore trade is differentiated in that documentation is required for both spot and forward fx for offshore trading. It is a widely held belief the INR will be among the first emerging markets to become spot eligible without restrictions or documentation. NDFs are available and FX options have just become available. There are some trading restrictions and documentation is required. Spot fx settlement is TRANSACTION PLUS TWO DAYS (T+2). There is a very liquid bond market with maturities available of up to 25yrs given the government's need to fund a persistent budget deficit. Interest Rate Swaps are available onshore and are traded up to 10 years but with mixed liquidity.

Korea

The won, KRW, is in a free float regime. Local and offshore markets are treated separately. Documentation is required but on for delivery at maturity offshore and for forward FX contracts. NDF's are traded as are FX options. There are no trading restrictions. Interest Rate Swaps are available and are traded up to 10-years with interest rate options also available.

Mexico

The peso has floated since December 1994 after the exchange rate band regime was abandoned. Both FX and local debt markets are very liquid. The government issues bills with tenors ranging from one month up to one year on a weekly basis, according to a pre-announced schedule. Since last year, the government is also issuing longer-dated peso securities with up to 5 year maturity, but the short end is most liquid. The government has issued peso denominated securities only since 1995 and inflation linked bonds since 1996. The extension in the yield curve that resulted from the consolidation of a more stable macroeconomic framework in recent years has allowed several Mexican firms to issue peso-denominated securities with medium term tenors in the domestic market. Interest rate swaps are liquid up to 5 years and are traded up to 10 years.

Poland

The zloty, PLN, has been free floating since April 2000. It is convertible for current account transactions. Most money market transactions are done through forex swaps for offshore investors. Domestic security exposures can be hedged in the domestic forward market by offshore investors. An offshore interest rate swap market has been developing fast, with up to the 5 year being the most liquid part of the IRS curve.

Singapore

The Singapore dollar, SGD, is under a managed float regime guided by the currency's trade weighted index. The Monetary Authority of Singapore's long term policy is to manage a trade weighted appreciation of the currency to dampen imported inflation and to balance aggregate demand. The local and offshore markets are not distinguished and there are no local/offshore restrictions. There is a liquid spot market and a limited forward FX market. NDF's are not available but FX options are. There are no trading restrictions, documentation is therefore not required. With the promotion of the central bank, the government and the corporate bond markets have grown in recent years. IRS's are traded on-shore from 1 to 10 years with liquidity good up to 5 years but poor beyond there.

South Africa

The South African domestic market is one of the more sophisticated in terms of products and liquidity in comparison to the other markets. Foreign exchange and money markets are liquid, with active participation both from onshore and offshore investors. The fixed-income market is also well developed, with a term structure of up to 30 years. The Interest rate swap market is also developing fast and becoming liquid. There are restrictions for offshore investors but these are rarely enforced.

Thailand

Following the Asian financial crisis the authorities introduced new restrictions on THB flows. These tighter controls have reduced THB volatility and helped the Bank of Thailand maintain interest rates at lower levels. THB is a freely floating currency with segregated domestic and offshore markets. Official documentation is required to trade THB both in spot and forward market. NDF's are not available but options are. The BOT has recently increased the level of documentation required by non residents. The government bond market has grown rapidly since 1997, to help set the benchmark for corporate bond issuance. Issuance rose sharply as the government raised funds to finance the financial sector bail-out in 1998. The corporate bond market has also flourished as companies turn to the bond market for funding (due to low interest rate and banks' reluctance to lend). IRSs are available off-shore and on-shore from 1-10 years with liquidity poor beyond 5 years.

Turkey

Since February 2001 the Turkish Lira, TRL, has been a fully convertible currency, having been a managed basket up until then. There are no restrictions on offshore investment. Both forex and fixed-income markets are liquid, and offshore investors are fairly active in all markets. The longest maturity in TRL is 18 months. The most liquid part of the curve is up to 1 year. There is a liquid and active repo market with O/N-1w maturities.

* The “Average Bid/Offer” listings above are illustrations of how the average prices or spreads of a listed currency pair may appear. They do not, however, reflect the spreads or bid/offer prices available to forex traders through Global Forex Trading, Division of Global Futures and Forex, Ltd.