Handbook of Exchange Rates

1.8 Acknowledgments

The authors would like to thank the editors, an anonymous referee, Geir Bjønnes, Alain Chaboud, Alex Heath, Colin Lambert, Michael Melvin, Michael Moore, Richard Olsen, and James Whitelaw for their helpful comments and suggestions on the final text. We also thank many anonymous market participants for their discussions and insights. Any remaining errors are our own. The views expressed in this chapter are those of the authors and do not necessarily represent those of the Norges Bank.

¹Every currency has a three-letter currency code, such as CAD for the Canadian dollar. These codes have been developed by the International Organization for Standardization (www.iso.org). In labeling currency pairs, market practice is to express the base currency first, as in “dollar–yen” or USD/JPY, which should be read as Japanese yen (JPY) per USD. Major exchange rates have nicknames: USD/CHF is “swissie” and NZD/USD is “kiwi.” GBP/USD is “cable” in reference to the first trans-Atlantic telegraph cable that connected FX traders in London and New York.

²As an example, in interdealer spot trading, the volumes traded in EUR/ NOK (Norwegian krone) are 10 times larger than the sum of those in USD/NOK, GBP/NOK, and NOK/JPY.

³The most actively traded currency pairs have USD or EUR on one side.

⁴A pip is short form for Price Increment Point. In EUR/USD, a one-pip change is, for example, from 1.2345 to 1.2346. In most major currency pairs, one pip is roughly one basis point.

⁵With a spot ...