FX Glossary(P)

P

Pension

In general, although is it said that this is the employee’s pension and national pension to be received after the retirement, the pension in the case of the foreign currency market, it refers to the pension operation unit of trust banks and life insurance companies, when you are thinking of the influence that it can give to that market, the use of that trend will be quite often

Plaza Accord

The agreement with regards to the exchange rate that was announced in the conference of the G5 (advanced five countries finance ministers and central bank governors) held at the New York Plaza Hotel on September 22, 1985. At the time, the United States is struggling to huge trade deficit and fiscal deficit (twin deficit). In particular, the United States introduced a proposal of “strong dollar weaker yen”, in order to correct the trade deficit with Japan. When the Japan Minister of Finance at the time of the proposal (the late Mr. Noboru Takeshita) has accepted the proposal, the agreement was made. In just one day, the day after the agreement was announced, the dollar / yen rate, yen fell about \20 from $ 1 = \235. Then, weak dollar trend continues, the value of dollar after the first year almost halved, in the $ 1 = \120 came to be the level that was being carried out in the trade.

Position

Speaking at the exchange trading, refers to the currency that is currently being held.

Position Adjustment

For the investors in order to change the distribution of investment funds, the buying (selling) order to settle the position on hold. If the market has changed when without any event, such as an announcement of economic indicators, there are cases that the buying (selling) position adjustment comes out.

Position Taker

To create a position to take their own risk, and refers to those who aim for profit by speculation.

Position Talk

Since the investors that have dollar buying positions, in fact wants the dollar to become stronger (higher), will find reasons on how dollars would get strong like talking the same way to other people. On the other hand, the investors who have dollar selling positions, since they want the dollar to get weak (cheap), will find reasons on how dollars would get weaker like talking the same way to other people. Conversations and phrases that contain the desire to gain profit out of their own position is called the position talk.

Premium

Premium is the forward rate. In the option trading, the option fee is called Premium. [← → Discount]

President Cycle

The idea that there is a correlation between the cycle (the period) in the dollar prices and value of stocks during the year of US presidential election. 「US stock prices has low prices during year of US presidential election, the rise of the presidential election」is said to be the typical theory wherein "to rise over the typical year of presidential cycle」.

Price

It’s the exchange rate to be traded in the foreign exchange market. For example, currently, if we use the price of "120.15-20", in the exchange of inter-bank foreign exchange dealers and brokers (foreign exchange transaction traders), when you tell the rate, only the last two digit will be read aloud as in "one five, two zero".

Price Limit

It means performing the transaction by the pre-specified rate when producing the trade order. In the buying price limit, specify the price cheaper than the current rate, in the selling price limit, specify the price higher than the current rate. On the other hand, in case of selling the it becomes cheaper than the current rate, and to buy when it gets higher than the current rate, the reverse price limit is being used.[← → Stop Order]

Profit-Taking

To reverse trade the buying position and sell to determine the profit.

Purchasing Power Parity(PPP)

It is the idea to determine the exchange rate by the ratio that you can buy the same thing by the currency of your own country and foreign currency. For example, the hamburger of McDonald's that is a universal commodity, there is a way of thinking that the exchange rate are being adjusted on the ratio that can be purchased by the expense of the same standard of each country.

Purchasing Power Parity Theory

Exchange rate is one of the foreign exchange market determination theory based on the ratio of the of the purchasing power of the national currency and foreign currency (one of the concept to explain the determinants of the exchange rate).