000 Guide To Currency Trading - Forex

CllOl 1O
ClRRlNCY 1ROlNC
from Global Forex Trading

lcrci_r Currcrcic CuiHc. 1nllc cl Ccrlcrl

NTPODUCTON .............................................................................................................................................................................. l\
ForoxA Finanoial Markot Built on nnovation................................................................................................................................. \
Brio History o Forox........................................................................................................................................................................ \l
Today's Forox.................................................................................................................................................................................... \ll
Trading Forox.................................................................................................................................................................................... \lll
History o Global Forox Trading........................................................................................................................................................ lX
DEvELOPED COUNTPES
Australia
Spot ........................................................................................................................................................................................ 10
Eoonomio Ovorviow ............................................................................................................................................................... 10
Monotary & Fisoal Polioy ........................................................................................................................................................ 11
mportant Cnaraotoristios o tno Australian Dollar ......................................................................................................... ........ 12
Canada
Spot ........................................................................................................................................................................................ 13
Eoonomio Ovorviow ....................................................................................................................................................... ........ 13
mportant Cnaraotoristios o tno Canadian Dollar .................................................................................................................. 14
mportant Eoonomio ndioators For Canada ..................................................................................................................... 14
Europoan Union
Spot ........................................................................................................................................................................................ 15
Tno EMU Critoria ............................................................................................................................................................... 16
mportant Cnaraotoristios o tno Euro ............................................................................................................................ ........ 17
Groat Britain
Spot ........................................................................................................................................................................................ 18
U.K.'s Fivo Eoonomio Tosts For Euro ................................................................................................................................. 19
mportant Cnaraotoristios o tno Britisn Pound .............................................................................................................. ........ 20
Euro-Storling Futuros Can Givo ndioations For ntorost Pato Movomonts ............................................................................ 20
Commonts By U.K. Politioians Will Aoot Tno Euro ............................................................................................................... 21
GBP Has Positivo Corrolation Witn Enorgy Prioos ......................................................................................................... ........ 21
GBP Crossos EUP/GBP vorsus GBP/USD .......................................................................................................................... 21
mportant Eoonomio ndioators For Tno U.K. ......................................................................................................................... 21
Japan
Spot ........................................................................................................................................................................................ 22
Japanoso Banking Crisis ............................................................................................................................................... ........ 22
mportant Cnaraotoristios o tno Japanoso Yon ..................................................................................................................... 24
mportant Eoonomio ndioators For Japan ............................................................................................................................. 24
Now Zoaland
Spot ........................................................................................................................................................................................ 25
mportant Cnaraotoristios o tno Now Zoaland Dollar ............................................................................................................ 26
Population Migration .............................................................................................................................................................. 27
mportant Eoonomio ndioators or Now Zoaland .................................................................................................................. 27

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Switzorland
Spot ........................................................................................................................................................................................ 28
Monotary & Fisoal Ovorviow .................................................................................................................................................. 28
mportant Cnaraotoristios o tno Swiss Frano ........................................................................................................................ 29
mportant Eoonomio ndioators For Switzorland .................................................................................................................... 30
Unitod Statos
Spot ........................................................................................................................................................................................ 31
mportant Cnaraotoristios o tno U.S. Dollar .......................................................................................................................... 32
mportant Eoonomio ndioators For Tno U.S. ......................................................................................................................... 33
EMEPGNG COUNTPES
Cnina
Spot ....................................................................................................................................................................................... 34
Czoon Popublio
Spot ....................................................................................................................................................................................... 35
Hong Kong
Spot ....................................................................................................................................................................................... 36
Hungary
Spot ....................................................................................................................................................................................... 37
ndia
Spot ....................................................................................................................................................................................... 38
Koroa
Spot ....................................................................................................................................................................................... 39
Moxioo
Spot ....................................................................................................................................................................................... 40
Poland
Spot ....................................................................................................................................................................................... 41
Singaporo
Spot ....................................................................................................................................................................................... 42
Soutn Arioa
Spot ....................................................................................................................................................................................... 43
Tnailand
Spot ....................................................................................................................................................................................... 44
Turkoy
Spot ....................................................................................................................................................................................... 45

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CuiHc lc Currcrc, 1rnHir_

rom Global Forox Trading
Tnis guido is writton or botn pooplo wno aro now to orox trading as woll as tnoso wno navo oxporionoo witn trading in tno orox
markot. Writton oxolusivoly or tradors by our proossional orox doaling sta, tno Guido to Curronoy Trading providos an osson-
tial ovorviow o tno spot orox markot in ono oasytoroad dooumont. Tno Guido to Curronoy Trading is assomblod witn osson-
tials or dovolopod and omorging oountrios' ourronoios.
t is our nopo tnat tnis guido will provido you witn tno inormation nooossary to study tno undamontal inluonoors tnat powor tno
orox markot. Tnoso oompriso oonoroto aots about oaon oountry's rospootivo ourronoy as woll as important onaraotoristios and
ooonomio indioators tnat prossuro oroign oxonango ratos. Loarn tno partioulars about oaon oountrios monotary and isoal
polioy, tnoir ooonomio workings and wnon govornmontal announoomonts or ovonts ooour.
Tno publioation bogins witn a ow basio aots about tno trond o orox trading, its nistory and sovoral tidbits about Global Forox
Trading. Sinoo 1997, GFT nas boon nolping tradors movo anoad in tno spot orox markot. Witn tno introduotion o its DoalBook
FX 2 trading sotwaro in 2001, GFT nas grown into a worldloading uturos oommission moronant and primary markotmakor in
tno spot orox markot.
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lcrcx lirnrcinl Mnrlcl luill cr lrrc\nlicr
o mattor tno stato o tno U.S. Dollar, moro and moro spooulators aoross tno globo aro trading tno world's ourronoios
instoad o in traditional markots suon as oquitios, uturos or options. Foroxtno oroign oxonango or global ourronoy markot-
is ono o tno astost growing sootors o tno inanoial markotplaoo or rotail tradors, aooording to Stooks Futuros and Options
Magazino.
Trading tno Dollar, tno Euro, Japanoso Yon or a varioty o otnor ourronoios, wnion proviously was dono only by largo
banks or a soloot group o sopnistioatod individuals, oan now bo dono rom a porsonal oomputor or porsonal digital assistant
(PDA) as oasily as trading a snaro or two o Miorosot
. Witn an ostimatod $1.5 trillion USD tradod daily, trading orox is now
availablo or individualsoommonly roorrod to as rotail orox. Until tno arrival o tno ntornot and orox sotwaro, tno avorago
invostor oouldn't partioipato in orox trading.
Tno rising numbor o pooplo trading rotail orox oan bo oroditod to tno arrival o nign-spood ntornot oonnootions and
moro oompanios building trading sotwaro to aoooss orox. n tno past, tno only way to gain aoooss to tno orox markot was
tnrougn banks tnat transaotod largo amounts o ourronoios or oommoroial and invostmont purposos in tno intorbank markot
making it unavailablo to most individuals.
Now gonorations o nigntoon brokorago irms aro oompoting or oustomors, but only a ow aro building nignly
advanood trading platorms tnat powor tno tools noodod to koop up witn tno astpaood orox markot. Global Forox Trading, an
Ada, Mion.basod oompany tnat's rison as a worldloador in onlino orox trading, nas produood ono o tno most advanood
trading platorms or orox to dato.
Foundod in 1997 as a oustomorsorvioo/toonnologymindod oompany, GFT's propriotary trading sotwaro platorm
or orox tradors, oallod DoalBook FX, was introduood in 2000. n addition to winning sovoral industry awards, DoalBook
FX
nolpod to propol GFT into a worldloador o onlino orox trading by tno ond o 2001.
Bundlod into ono sotwaro applioation, tno "FX" sotwaro transmits rosouroos, suon as roaltimo tradablo ourronoy
prioos, roaltimo prioo onarting, toonnioal indioators and uptotnominuto world and inanoial nows. n 2003, GFT introduood
a sooond gonoration o its industry rospootod sotwaro, DoalBook
FX 2 in addition to DoalBook
FX Mobilo, a ulloaturod
orox trading applioation or pookot po usorsurtnor ovolving aoooss to tno orox markot.
Forox tradors wno uso GFT's sotwaro gain aoooss to tno samo typos o rosouroos omployod by top tradors tnrougn-
out tno world. Sovon yoars ator its ounding, GFT symbolizos ono tno most rospootod orox trading irms in tno oroign
oxonango industry witn olionts and global partnors in 100 oountrios worldwido. But, orodibility and intogrity oontinuo to bo tno
basis o all GFT's rolationsnips, omployoos and partnors.
Tno oompany roquiros tnat its partnors (roorring partios) pass tnrougn stringont baokground onooks, somotning tnat
is not roquirod but is dono by GFT to onsuro tno intogrity o its partnors. n addition, all o GFT's salos toam and doalors aro
lioonsod orox spooialists tnrougn tno Commodity Futuros Trading Commission, tno govornmont agonoy tnat rogulatos uturos
and options markots in tno U.S.
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lricl lilcr, cl lcrcx
omo orm o ourronoy nas boon around sinoo tno timo o tno pnaraons, but tno oroign oxonango markot (orox), as
wo know it today, originatod in 1973. Sovoral ma|or onangos prior to tnis timo gavo way to tno modorn day orox onvironmont.
Tno Groat Doprossion along witn tno romoval o tno gold standard providod tno irst ma|or transormations or orox.
Ator tno U.S. dollar dooroasod in valuo, most o tno world's ourronoios woro oomparod to tno stablo Britisn pound, until ator
WW wnon tno Britisn ooonomy was in ruins.
Anotnor koy transormation or orox ooourrod wnon tno Brotton Woods Aooord was ormod by tno U.S., Groat Britain
and Franoo. Tnoso oountrios mot at tno Unitod Nations Monotary and Finanoial Conoronoo in Brotton Woods, N.H., to dosign
a moro stablo, global inanoial systom. Tno agroomont ormulatod tno idoa o "pogging" ourronoios and oroatod tno ntorna-
tional Monotary Fund to nolp stabilizo tno global ooonomy.
For tno irst timo in nistory, ma|or ourronoios woro poggod against tno U.S. dollar and allowod to luotuato rom a sot
standard. For oxamplo, wnon an oxonango rato approaonod tno limit on oitnor sido o tno standard, tno rospootivo oountrios
oontral bank would intorvono to bring tno oxonango rato baok into an aoooptod rango.
Tno Brotton Woods Aooord ultimatoly ailod along witn subsoquont agroomonts to stabilizo global ourronoios, but did
ostablisn strongtn or Europo and Japan. n 1973, tno ourront rooloating systom bogan, but wasn't oioially mandatod until
1978. Tno rooloating struoturo was tno boginning o tno ourront oroign oxonango markot.
Prosontly, orox is inluonood by tno G7, an intornational organization ostablisnod in 1985 to aoilitato ooonomio
oooporation among tno world's largost industrial nations. Mombors o tno G7 disouss and ooordinato aotions on ooonomio and
oommoroial mattors tnat somotimos rosult in tno movomont o orox markots.
Foroign oxonango oxists so pooplo, oompanios and govornmont ontitios oan pay or goods and sorvioos. t is also
usod by importors and oxportors, intornational portolio managors, multinational oorporations, spooulators, daytradors, long
torm noldors and nodgo unds.
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1cHn,' lcrcx
orox is tno largost markot in tno world, witn an avorago o $1.5 trillion U.S. dollars tradod daily, tnat's drivon by tno
supply and domand o ourronoios. Tno volumo o orox oausos signiioant liquidity, wnion moans it's loss inluonood by largo
buy and soll ordors tnat oan oauso unwarrantod prioo manipulation. Tnis moans a porson or a oompany oan't ontor tno markot
to inluonoo it basod striotly o roputation or tno volumo o a transaotion.
n tno past, tno only way to gain aoooss to tno orox markot was tnrougn banks tnat movod largo amounts o ourron-
oios or oommoroial and invostmont purposos (known as tno intorbank markot) making it unavailablo to all but tno woaltniost
individuals. n addition to tno buying and solling o oroign ourronoios, intorbank markot banks oompoto witn oaon otnor or
oorporato oustomors, most o wnion, sook to oapitalizo on tno bost oxonango ratos possiblo (nodging).
Ono o tno largost inluonoors o tno intorbank markot aro tno world's oontral banks. Contral banks aro tno prinoiplo
govornmontrun banks o tno ma|or oountrios o tno world, suon as tno Unitod Statos' Fodoral Posorvo Bank or Japan's Bank
o Japan. Tnoso oontral banks oton intorvono in tno orox markot to oarry out tnoir oountrios' monotary polioy. At timos, oontral
bank aotivity oan bo oxtromoly disruptivo to ourronoy markots as govornmonts manouvor to onango tno lovol o tnoir ourronoy
ratos. Tnoso intorvontions oan oton oroato groat opportunity as woll as risk or spooulators.
Tnird-party brokorago irms oallod primary markotmakors provido anotnor oomponont o tno orox markot. Tnoso
irms romain on tno outor porimotor o tno intorbank markot buying and solling ourronoios rom multiplo banks making tnom vory
appoaling to individual spooulators booauso o tno prioos tnoy quoto. ntorbank prioos somotimos navo largo prioo gaps, but
markotmakors assumo tnis risk to givo oonsistont, oompotitivo prioing to individuals at a rotail lovol.
Primary markotmakors oor prioos basod on intorbank prioos to mako ourronoy trading availablo to individuals to
trado. Tnoso aro basod upon tno oxonango ratos as tnoy aro quotod by banks to oaon otnor. Furtnormoro, primary markot-
makors provido a twosidod markot and add ovorall liquidity to tno orox markot.
Booauso orox trading is not oontralizod on an oxonango as witn tno stook and uturos markots, it's oonsidorod an
ovortnooountor (OTC) markot. Most orox transaotions aro oonduotod botwoon two partios via a tolopnono or tno ntornot.
Liko otnor inanoial instrumonts, orox irms mako a small proit rom tno dioronoos botwoon tno buy and soll prioos, tnus
ooring oommissionroo trading.
Most orox trading irms mako tnirdparty sotwaro availablo to tradors wnilo otnors dovolop tnoir own propriotary
trading sotwaro. Poaltimo ourronoy prioos and data aro od into tno sotwaro via a doaling dosk so tradors oan mako dooisions
or prodiotions in an oort to mako a proit. Somo o tno most advanood orox trading sotwaro today inoludos roaltimo onarting,
toonnioal indioators and up-to-tno-minuto nows. Tnoso rosouroos usod to bo only availablo to proossional tradors in tno
intorbank markot.
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1rnHir_ lcrcx
orox trading is tno simultanoous buying o ono ourronoy and solling o anotnor and is tradod in pairs
(o.g., Euro/U.S. Dollar or U.S. Dollar/Japanoso Yon). For spooulators, tno bost trading prospoots aro witn tno most
oommonly tradod ourronoios oallod "tno ma|ors." Moro tnan 85 poroont o all daily transaotions involvo trading tno
ma|ors, inoluding tno U.S. Dollar, Japanoso Yon, Euro, Britisn Pound, Swiss Frano, Canadian Dollar and Australian
Dollar.
Liko most otnor inanoial instrumonts, orox is quotod on a "bid" and "ask" prioo systom. For instanoo,
tno bid is tno prioo at wnion a doalor is willing to buy (and olionts oan soll) tno baso ourronoy or a oountor
ourronoy. Tno ask prioo, on tno otnor nand, is tno prioo at wnion doalors will soll (and olionts oan buy) tno baso
ourronoy or tno oountor ourronoy.

USD / JPY USD / JPY USD / JPY
baso ourronoy oountor ourronoy buy soll bid ask
Tno orox markot litorally ollows tno sun around tno globo, boginning in Sydnoy and moving as tno
businoss day bogins in oaon inanoial oontor. For oxamplo, wnon tno Paoiio Pim markots suon as Japan and
Singaporo bogin to slow, tno Europoan markots opon.
Tnoso markots aro tnon ollowod by tno Nortn Amorioan markots o tno Unitod Statos, Canada and
Moxioo. As tnoso slow down or tno ovoning, tno trading oyolo in Australia bogins again. Unliko any o tno otnor
inanoial markots, spooulators oan rospond to ourronoy luotuations oausod by ooonomio, sooial and politioal
ovonts at tno timo tnoy ooour, day or nignt.
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lilcr, cl Clclnl lcrcx 1rnHir_
lobal Forox Trading (GFT), Division o Global Futuros & Forox, Ltd., was oundod in 1997 by Gary L. Tilkin. GFT was
oroatod to addross tno inoroasing numbor o ourronoy trading domands Tilkin's olionts nad in tno uturos and spot orox
markots. Tilkin also ormod GFT to bring intogrity in produots and improvod oustomor sorvioo to orox olionts, an omorging
markot or individual spooulation. Global Futuros & Forox, Ltd. romains tno paront oompany o GFT, witn its businoss oousod
on providing olionts aoooss to uturos oontraots.
GFT's ounding prinoipals woro aimod at oroating tno bost toonnologioal inrastruoturo and orox trading sotwaro
wnilo dolivoring tno bost possiblo oliont sorvioos. ts managomont toam idontiiod tno union botwoon orox and tno ntornot
would oroato a niono markot goarod or individual orox spooulators. Tno oombination rosultod in a now gonoration o brokorago
irms oompoting or oustomors wno domandod spood, aoouraoy and aooountability to pursuo orox prioing and trading.
Wnilo many otnor orox irms oousod on dovoloping a orox markot and nign-oost training programs, GFT oonoon-
tratod on building and porooting orox sotwaro, toonnology and tools. Tradors noodod ast, aoourato dolivory o ourronoy
prioos in ordor to mako inormod trading dooisions on astmoving orox markots, but most sotwaro nad ailod to koop up.
GFT's turning point napponod snortly ator building its own propriotary orox trading platorm ollowod by disoontinuing its uso
o tnirdparty sotwaro tnat did not moot its porormanoo noods.
At tno samo timo it lovoragod rolationsnips witn oxporionood orox proossionals, GFT omployod a toam o oxports in
sotwaro dovolopmont to oroato a orox trading platorm liko no otnor. GFT's propriotary trading sotwaro platorm or orox
tradors, oallod DoalBook
FX, was validatod by orox usors around tno world in 2000. Winning sovoral industry awards,
DoalBook
FX nolpod to build GFT into a world-loador in onlino orox trading by tno ond o 2001.
GFT's trading platorm is uniquo booauso it's poworod using many o tno samo tools onoo only availablo to intorbank
proossionals. Bundlod into ono program, tno platorm dolivors rosouroos suon as roaltimo ourronoy prioos, roaltimo prioo
onarting, toonnioal indioators and up-to-tno-minuto world and inanoial nows. n 2003, GFT introduood a sooond gonoration o
its sotwaro, DoalBook
FX 2. n addition, GFT introduood DoalBook
FX Mobilo, a ulloaturod orox trading applioation or

pookot po usors. Botn o tnoso produots bolstorod GFT as a toonnology innovator.
n addition to sotwaro, anotnor baokbono o GFT's onlino ourronoy trading sorvioos is ound in its invostmont in
toonnology. Tradors wno uso GFT aoniovo maximum soourity and roliability to got tno inormation noodod or instant rosults. ts
systoms utilizo a ast ordor oxooution and trading struoturo supportod by multiplo, rodundant sorvor olustors, ntornot oonnoo-
tions and baokup powor systoms.
Sorving oustomors in 100 oountrios worldwido, GFT is partnorod witn roorring partios tnat introduoo now tradors to
GFT and its sorvioos. GFT also oors privato "wnito laboling" o its sotwaro or oompanios wno aro looking to build tnoir own
brand in tno markot. Tno koy to GFT's popularity witn indopondont ailiatos is its ability to dolivor roliablo, oompotitivo ourronoy
prioing and quality in its produots and sorvioos.
To dato, GFT nas roalizod triplodigit growtn in oaon suooossivo yoar tnrougn 2003. GFT's toonnologioal inrastruo-
turo and invostmont in orox trading sotwaro indioatos moro growtn in tno uturo as tno domand or its produots and sorvioos
oontinuos to assist orox tradors tnrougnout tno world.
lX
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ECONOMC OvEPvEW
Australia's gross domostio produot (GDP) or 2002 was oloso to $400 billion USD Tno ooonomy is rolativoly small, but on a por
oapita basis is oomparablo to many industrializod Wostorn Europoan oountrios. Australia nas a sorvioooriontod ooonomy witn
oloso to 79 poroont o its GDP ooming rom industrios suon as inanoo, proporty and businoss sorvioos. Howovor, tno oountry
nas a trado doioit, witn manuaoturing dominating its oxporting aotivitios. Pural and minoral oxports aooount or ovor 60 poroont
o all manuaoturing oxports. As a rosult, tno ooonomy is nignly sonsitivo to onangos in oommodity prioos.
Japan and tno ASEAN (Assooiation o Soutnoast Asian Nations) aro tno loading importors o Australian goods. n tno past,
nowovor, Australia nas oxporionood muon o tno spillovor ooots o gonoral Asian woaknoss. Tnis rosilionoo stoms rom
Australia's sound oundation o strong domostio oonsumor oonsumption.
MONETAPY & FSCAL POLCY
Tno Posorvo Bank o Australia (PBA) is rosponsiblo or tno monotary polioy o Australia. Dooisions on monotary polioy aro
basod upon oonsonsus witnin tno oommittoo.
Tno PBA's onartor statos tnat tno mandato o tno Posorvo Bank Board is to oous monotary and banking polioy to nolp onsuro:
tno stability o tno ourronoy o Australia,
tno maintonanoo o ull omploymont in Australia, and
tno ooonomio prospority and wolaro o tno pooplo o Australia.

n ordor to aoniovo tnoso ob|ootivos, tno govornmont nas sot an inormal oonsumor prioo inlation targot o 2 to 3 poroont por
yoar.
* The "Average Bi / Offer" |istings above are i||ustrations of how the average prices or spreas of a |iste currency pair may appear. They o not, however,
ref|ect the spreas or bi / offer prices avai|ab|e to forex traers through G|oba| Forex Traing, Division of G|oba| Futures an Forex, Lt.

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Currency
Common Name
Quotation Convention
Most liquid cross
Average Bid / Offer *
1 pip
Settlement
Australian Dollar
Aussio
4 dooimal points
AUD / USD
5 pips (0.6800 / 0.6805)
.0001 USD
Transaotion plus two days (T +2)
SPOT
GFT, Foroign Curronoios Guido, Australia p. 1 / 3
MONETAPY & FSCAL POLCY (oontinuod)
Cash rate: Tnis is tno PBA's targot rato or opon markot oporations. Tno oasn rato is tno rato onargod on ovornignt loans
botwoon inanoial intormodiarios. As a rosult, tno oasn rato snould navo a oloso rolationsnip witn tno provailing monoy markot
intorost ratos. Cnangos in monotary polioy dirootly aoot tno intorost rato struoturo o tno inanoial systom.
Open market operations: Tno oous o daily opon markot oporations is to koop tno oasn rato oloso to tno targot by managing
monoy markot liquidity providod to oommoroial banks. tno Posorvo Bank wisnos to dooroaso tno oasn rato, tnoy would
inoroaso supply o snortdatod ropuronaso agroomonts at a lowor intorost rato tnan tno provailing oasn rato, wnion would in
ossonoo, dooroaso tno oasn rato. tno Posorvo Bank wisnos to inoroaso tno oasn rato, tnoy would dooroaso supply o snort-
datod ropuronaso agroomonts, wnion would in ossonoo inoroaso tno oasn rato. A ropuronaso agroomont involvos a oasn takor
(oommoroial bank) solling soouritios to a oasn providor (PBA) wnilo agrooing to ropuronaso tno soouritios o tno samo typo and
quantity at a lator dato. Tnis struoturo is similar to a soourod loan wnoroby tno oasn takor must pay tno oasn providor intorost.
Tnoso ropo transaotions tond to navo vory snort maturitios ranging rom ono day to a ow wooks.
Sinoo 1983, Australia nas nad a loating oxonango rato. Tno Posorvo Bank o Australia may undortako oroign oxonango markot
oporations wnon tno markot tnroatons to booomo oxoossivoly volatilo or wnon tno oxonango rato is oloarly inoonsistont witn
undorlying ooonomio undamontals. Tno PBA monitors a tradowoigntod indox (TW) as woll as tno orossrato witn tno U.S.
dollar. ntorvontion oporations aro invariably aimod at stabilizing markot oonditions ratnor tnan mooting oxonango rato targots.
Tno PBA moots ovory montn (oxoopt or January), on tno irst Tuosday o oaon montn to disouss potontial onangos in monotary
polioy. Following oaon mooting, tno PBA issuos a pross roloaso outlining |ustiioations or tnoir monotary polioy onangos. Tnoy
also publisn a montnly Posorvo Bank Bullotin. Tno May and Novombor issuos o tno Posorvo Bank Bullotin inoludo tno Somi-
Annual statomont on tno Conduot o Monotary Polioy. Tno Fobruary, May, August, and Novombor issuos oontain a Quartorly
Poport on tno Eoonomy and Finanoial Markots. t is important to road tnoso bullotins or signals on potontial monotary polioy
onangos.
MPOPTANT CHAPACTEPSTC OF THE AUSTPALAN DOLLAP
Commodity-Iinked currency:
Tno AUD$ nas an 80 poroont oorrolation witn oommoditios and moro spooiioally, gold prioos. ts link to gold stoms rom Austra-
lia boing tno tnird largost gold produoor in tno world and roprosonts approximatoly $5 billion in oxports or tno nation oaon yoar.
As a rosult, tno AUD$ bonoits wnon oommodity prioos inoroaso. O oourso, it also dooroasos wnon oommodity prioos doolino.
Carry trade effects:
Australia nas ono o nignost intorost ratos among tno dovolopod oountrios. Witn a airly liquid ourronoy, tno AUD$ is ono o tno
most popular ourronoios to buy or oarry trados.
Interest rate differentiaIs between the cash rates of AustraIia and the short-term interest rate yieIds of other industriaI-
ized countries are cIoseIy foIIowed:
ntorost rato diorontials oan bo good indioators o potontial monoy lows as tnoy indioato now muon yiold promium AUD$
snorttorm ixod inoomo assots aro ooring ovor oroign snort-torm ixod inoomo assots, or vioo vorsa. Tnis diorontial providos
tradors witn indioations o potontial ourronoy movomonts, as invostors aro always looking or assots witn tno nignost yiolds.
Severe weather conditions such as droughts, negativeIy affect AustraIia's economy:
Sinoo tno bulk o Australia's oxports aro oommoditios, tno oountry's GDP is nignly sonsitivo to sovoro woatnor oonditions tnat
may damago tno oountry's arming aotivitios. Tnis is ospooially important booauso agrioulturo aooounts or 3 poroont o tno
oountry's GDP. Tno PBA ostimatos tnat tno "doolino in arm produotion oould dirootly roduoo GDP growtn by around 1 poroont-
ago point." Asido rom oxporting aotivitios, a drougnt also nas indiroot ooots on industrios tnat supply and sorvioo agrioulturo.
MPOPTANT ECONOMC NDCATOPS FOP AUSTPALA
Gross Domostio Produot (GDP)
Consumor Prioo nlation (CP)
Balanoo o Goods and Sorvioos
Privato Consumption
Produoor Prioo ndox (PP)


lcrci_r Currcrcic CuiHc. CnrnHn

ECONOMC OvEPvEW
Canada is tno 7tn largost oountry in tno world witn GDP valuod at $700 billion USD in 2001. Tno oountry nas boon growing
oonsistontly sinoo 1991. Canada is ourrontly tno world's 5tn largost produoor o gold and tno 14tn largost produoor o oil.
Howovor, twotnirds o tno oountry's GDP oomos rom tno sorvioo sootor, wnion omploys 3 out 4 Canadians. Manuaoturing and
rosouroos aro vory important or tno Canadian ooonomy, as it roprosonts ovor 25 poroont o tno oountry's oxports.
Tno Bank o Canada (BoC) dotorminos monotary polioy or Canada. Tno BoC doos not navo poriodio polioy sotting mootings.
nstoad, tno oounoil moots on a daily basis and onangos in polioy oan bo mado at any point in timo.
Tno Bank o Canada's oous is on maintaining tno intogrity and valuo o tno Canadian dollar ourronoy. Tnis primarily involvos
onsuring prioo stability. Prioo stability is maintainod by adnoring to an inlation targot agrood upon witn tno Canada's Dopart-
mont o Finanoo. Tnis inlation targot is ourrontly sot at 1 poroont to 3 poroont. Tno BoC oontrols inlation tnrougn snorttorm
intorost ratos. Monotary oonditions tignton wnon snorttorm ratos inoroaso or tno tradowoigntod Canadian dollar approoiatos.
To onango monotary polioios, tno bank would manipulato tno bank rato, wnion would aoot tno oxonango rato. tno ourronoy
approoiatos to undosirablo lovols, tno BoC oan dooroaso intorost ratos to osot tno riso. it doprooiatos, tno BoC oan raiso
ratos. Howovor, intorost rato onangos aro not usod or tno purposos o manipulating tno oxonango rato. nstoad, it is usod to
oontrol inlation.

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Currency
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Canadian Dollar
Canadian
4 dooimal points
USD / CAD
5 pips (1.4500 / 1.4505)
.0001 CAD
Transaotion plus two days ( T +2)
SPOT
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lcrci_r Currcrcic CuiHc. CnrnHn
MONETAPY & FSCAL POLCY (oontinuod)
Tno ollowing aro tno most oommonly usod tools by tno BoC to implomont monotary polioy:
Gross Domestic Product (GDP)
Bank Rate: Tnis is tno main rato usod to oontrol inlation. Tnis is tno rato o intorost tnat tno Bank o Canada onargos to oommoroial banks.
Cnangos to tnis rato will aoot otnor intorost ratos, inoluding mortgago ratos and primo ratos onargod by oommoroial banks. Tnorooro, onangos
to tnis rato iltor into tno ovorall ooonomy.
Open Market Operations: Tno Largo valuo Transor Systom (LvTS) is tno ramowork or tno BoC's implomontation o monotary polioy. t is tnrougn
tnis ramowork tnat Canada's oommoroial banks borrow and lond ovornignt monoy to oaon otnor in ordor to und tnoir daily transaotions. Tno LvTS
is an olootronio platorm tnrougn wnion tnoso inanoial institutions oonduot largo transaotions. Tno intorost rato onargod on tnoso ovornignt loans
is oallod tno ovornignt rato or bank rato. Tno BoC oan manipulato tno ovornignt rato by ooring to lond at ratos lowor or nignor tnan tno ourront
markot rato i tno ovornignt londing rato is trading abovo or bolow tno targot banks.
On a rogular basis, tno bank roloasos a numbor o publioations tnat aro important to waton. Tnis inoludos a biannual monotary polioy roport tnat
oontains an assossmont o tno ourront ooonomio onvironmont and implioations or inlation and a quartorly Bank o Canada Poviow tnat inoludos
ooonomio oommontary, oaturod artiolos, spooonos by mombors o tno govorning oounoil and important announoomonts.
MPOPTANT CHAPACTEPSTCS OF THE CANADAN DOLLAP
Commodity Iinked currency
Canada's ooonomy is nignly dopondont on oommoditios. Tno positivo oorrolation botwoon tno Canadian dollar and oommodity prioos is oloso to
60 poroont. Typioally, as oommodity prioos inoroaso, tno CAD inoroasos and wnon oommodity prioos dooroaso, tno CAD doolinos.
Strong correIation with the U.S.
Tno U.S. imports 85 poroont o Canada's oxports. Tno Canadian ooonomy is nignly sonsitivo to onangos in tno U.S. ooonomy.
Mergers and acquisitions between firms in the U.S. and Canada are very common
Duo to tno proximity o tno U.S. and Canada, orossbordor morgors and aoquisitions aro vory oommon as oompanios worldwido strivo or
globalization. Tnoso morgors and aoquisitions load to monoy lowing botwoon tno two oountrios, wnion ultimatoly aoot tno ourronoios.
Interest rate differentiaIs between the cash rates of Canada and the short-term interest rate yieIds of other industriaIized countries are
cIoseIy foIIowed.
ntorost rato yiold diorontials provido tradors witn indioations o potontial ourronoy movomonts, as invostors aro always looking or assots witn
tno nignost yiolds.
Carry trades
Wnon Canada nas a nignor intorost rato tnan tno U.S., tno sollUSD, buyCAD oarry trado booomos moro popular duo to tno proximity o tno two
oountrios.
MPOPTANT ECONOMC NDCATOPS FOP CANADA
Unomploymont
Consumor Prioo ndox (CP)
Balanoo o Trado
Consumor Consumption
GFT, Foroign Curronoios Guido, Canada p. 2 / 2

lcrci_r Currcrcic CuiHc. lurcjcnr lricr

ECONOMC OvEPvEW
Tno Europoan Union (EU) was dovolopod as an institutional ramowork or tno oonstruotion o a unitod Europo. Tno EU oonsists
o 15 mombor oountrios, Austria, Bolgium, Donmark, Finland, Franoo, Gormany, Groooo, roland, taly, Luxombourg, Tno
Notnorlands, Portugal, Spain, Swodon, and tno Unitod Kingdom. All o tnoso oountrios snaro tno Euro as a oommon ourronoy,
oxoopt or Donmark, Swodon and tno Unitod Kingdom. Tnoy aro known as tno Europoan Monotary Union (EMU). Asido rom a
oommon ourronoy, tnoso oountrios also snaro a singlo monotary polioy diotatod by tno Europoan Contral Bank or (ECB).
Tno EMU is tno world's sooond largost ooonomio powor, witn GDP valuod at ovor $6 trillion USD in 2002. Witn a nignly
dovolopod ixod inoomo, oquity and uturos markot, tno EMU nas tno sooond most attraotivo invostmont markot or domostio
and intornational invostors. Tno EMU is primarily a sorvioooriontod ooonomy. Sorvioos in 2001 aooountod or approximatoly 70
poroont o GDP wnilo manuaoturing, mining and utilitios only aooount or 22 poroont o GDP.
Tno EMU is a trado and oapitallow drivon ooonomy. Unliko most ma|or ooonomios, tno EMU doos not navo a largo trado
doioit or surplus. n aot, tno EMU wont rom a small trado doioit in 2001 to a small trado surplus in 2002. EU oxports oompriso
approximatoly 19 poroont o world trado wnilo EU imports aooount or only 17 poroont o total world imports. Booauso o tno
sizo o tno EMU's trado witn tno rost o tno world it nas signiioant powor in tno intornational trado arona. ntornational olout is
ono o tno primary goals wnon tno EU was ormod allowing tno individual oountrios to group as ono ontity as woll as nogotiating
a moro oqual playing iold witn tno U.S., its largost trading partnor.
Tno EU's growing rolo in intornational trado nas important implioations or tno rolo o tno Euro as a rosorvo ourronoy. t is impor-
tant or oountrios to navo largo amount o rosorvo ourronoios to roduoo oxonango risk and transaotion oosts. Traditionally, most
intornational trado transaotions involvo tno Britisn Pound, tno Japanoso Yon, and/or tno U.S. Dollar. Booro tno Eurp was
ostablisnmont o tno Euro, it was unroasonablo to nold largo amounts o ovory individual EU national ourronoy. As a rosult,
ourronoy rosorvos tondod toward tno dollar. At tno ond o tno 1990s approximatoly 65 poroont o all world rosorvos woro nold
in U.S. dollars, but witn tno introduotion o tno ouro oroign rosorvo assots aro sniting in avor o tno ouro. Tnis trond is oxpootod
to oontinuo wnilo tno EU booomos ono o tno ma|or trading partnors or most oountrios around tno world.

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CONTACT :
Currency
Common Name
Most liquid cross
1 pip
Settlement
Euro
Euro
4 dooimal points
EUP / USD
3 pips (1.1570 / 1.1573)
.0001 USD
SPOT
GFT, Foroign Curronoios Guido, Europoan Union p. 1 / 3
Tno Europoan Contral Bank (ECB) is tno govorning body rosponsiblo or dotormining tno monotary polioy o tno oountrios partioipating in tno
EMU. Tno ECB's oxooutivo board oomprisos a prosidont, a vioo prosidont and our board mombors. Tnoso individuals along witn tno govornors
o tno national oontral banks mako up a govorning oounoil tnat makos now monotary polioy dooisions. Cnangos or dooisions aro typioally mado
by ma|ority voto and tno ECB's prosidont nas tno oasting voto in tno ovont o a tio. Tno oounoil nolds mootings on a biwookly basis.
Tno EMU's primary ob|ootivo is to maintain prioo stability and to promoto growtn. Monotary and isoal polioy onangos aro mado to onsuro tnat tnis
ob|ootivo is mot. Witn tno ormation o tno EMU, tno Maastriont Troaty was dovolopod by tno EU to apply a numbor o oritoria, ob|ootivos and goals
or oaon mombor oountry. Doviations rom tnoso oritoria by any ono oountry will rosult in noavy inos. Listod bolow, aro tno EMU oritoria. t is
apparont basod upon tnoso moasuros tnat tno ECB nas a striot mandato oousod on inlation and doioit. Gonorally, tno ECB strivos to maintain
annual growtn in HCP (Harmonizod Consumor Prioo ndox) bolow 2 poroont and M3 monoy supply) annual growtn around 4.5 poroont.
THE EMU CPTEPA
n tno 1992 Troaty on Europoan Union (tno Maastriont Troaty) tno ollowing oritorion woro ormulatod as a prooondition or any EU mombor stato
|oining ooonomio and monotary union (EMU).
A rato o inlation no moro tnan 1.5 poroont abovo tno avorago o tno tnroo bost pororming mombor statos, taking tno avorago o
tno 12montn yoaronyoar rato proooding tno assossmont dato.
Longtorm intorost ratos not oxoooding tno avorago ratos o tnoso lowinlation statos by moro tnan 2 poroont or tno proooding
12 montns.
Exonango ratos wnion luotuato witnin tno normal margins o tno oxonangorato moonanism (EPM) or at loast two yoars.
A gonoral govornmont dobt/GDP ratio o not moro tnan 60 poroont, altnougn a nignor ratio may bo pormissiblo i it is "suioiontly
diminisning."
A gonoral govornmont doioit not oxoooding 3 poroont o GDP, altnougn a small and tomporary oxooss oan bo pormittod.

Tno primary tools tno ECB usos to oontrol monotary polioy is tno ollowing:
Open Market Operations: Tno ECB nas our main oatogorios o opon markot oporations to stoor intorost ratos, manago liquidity and signal its
monotary polioy stanoo. Tnoso oatogorios aro main roinanoing oporations witn avorago maturitios o two wooks, longortorm roinanoing
oporations witn avorago maturitios o tnroo montns, ino tuning oporations dono ad noo to manago liquidity and struotural oporations suon as tno
issuanoo o dobt oortiioatos or rovorso transaotions.
ECB Minimum Bid Rate (repo rate): Tnis rato is tno koy polioy targot or tno ECB. t is tno lovol o borrowing tnat tno ECB oors to tno oontral
banks o its mombor statos. Tnis is tno rato tnat is sub|oot to onango at tno biwookly ECB mootings. Sinoo inlation is o nign oonoorn to tno ECB
tnoy aro moro inolinod to koop intorost ratos at loty lovols to provont inlation. Cnangos in tno ECB's minimum bid rato navo largo ramiioations or
tno EUP.
Tno ECB doos not navo an oxonango rato targot, but will aotor in oxonango ratos in tnoir polioy doliborations duo to oxonango ratos aoot on
prioo stability. Tnorooro, tno ECB is not provontod rom intorvoning in tno oroign oxonango markots i tnoy boliovo tnat inlation is a oonoorn. As
a rosult, oommonts by mombors o tno govorning oounoil aro widoly watonod by tno orox markot partioipants booauso tnoy roquontly movo tno
EUP.
Tno ECB publisnos a montnly bullotin dotailing analysis o ooonomio dovolopmonts and onangos to its porooptions o ooonomio oonditions, wnion
is important to ollow or signals to onangos in tno bias o monotary polioy.
MPOPTANT CHAPACTEPSTCS OF THE EUPO
EUR/USD cross is the most Iiquid currency
Tno Euro was introduood as an olootronio ourronoy in Jan 01, 1999. At tnis timo, tno Euro roplaood all proEMU ourronoios, oxoopt or tno
Groooo's ourronoy, wnion was oonvortod to tno Euro in Jan 2001. As a rosult, tno EUP/USD oross is now tno most liquid ourronoy in tno world and
its movomonts aro usod as tno primary gago o botn gonoral Europoan and U.S. strongtn/woaknoss.
Euro risks as a new currency
Sinoo tno Euro is a now ourronoy, tnoro aro numbor o aotors tnat nood to bo oonsidorod as risks to tno Euro tnat aro not aotors or otnor
ourronoios. Namoly, tno ECB is roquontly oonsidorod an untostod oontral bank, duo to its snort nistory. Tnis snort nistory doos not givo markot
partioipants a good gago to now tno oontral bank would roaot undor dioront ooonomio and politioal oonditions. n addition, sinoo tno Euro is tno
ourronoy or 12 mombor oountrios, it is nignly sonsitivo to politioal or ooonomioal instabilitios in any ono oountry.
Spread between ten-year U.S. Treasuries and ten-year Bunds can indicate Euro sentiment
Tno tonyoar govornmont bonds sorvo as an important indioator o uturo ouro oxonango ratos, ospooially against tno U.S. dollar. Tno diorontial
botwoon tno 10yoar U.S. govornmont bond and tno 10yoar Gorman Bund ratos oan provido a good indioation or Euro movomont. Bund ratos
aro nignor tnan troasury ratos and tno diorontial inoroasos, or tno sproad widons, tnis implios EUP bullisnnoss. A dooroaso in tno diorontial, or
sproad tigntoning is EUP boarisn. Tno 10yoar Gorman Bund is typioally usod to roprosont tno Eurozono.
Interest rate differentiaIs are use to predict Euro area money fIows
Anotnor usoul intorost rato is tno 3Montn ntorost Pato, also known as tno Euro intorbank oor rato or tno Euribor rato. Tnis is tno rato oorod
rom ono largo bank to anotnor on intorbank torm doposits. Tradors tond to oomparo tno Euribor uturos rato witn tno Eurodollar uturos rato.
Eurodollars aro doposits donominatod in U.S. dollars at banks and otnor inanoial institutions outsido tno Unitod Statos. Booauso invostors liko
nign yiolding assots, Europoan ixod inoomo assots booomo moro attraotivo as tno sproad botwoon Euribor uturos and Eurodollar uturos widons,
in avor o tno Euribors. As tno sproad narrows, Europoan assots booomo loss attraotivo, wnoroby implying a potontial dooroaso in monoy lows
into tno Euro.
MPOPTANT NDCATOPS FOP THE EUPO
All o tno ollowing ooonomio indioators aro important or tno Euro. Howovor, sinoo tno EMU oonsists o 12 oountrios, it is important to koop abroast
o politioal and ooonomio dovolopmonts suon as GDP growtn, inlation, and unomploymont or all mombor oountrios. Tno largost oountrios witnin
tno EMU aro Gormany, Franoo and taly. Tnorooro, in addition to tno ovorall EMU ooonomio data, tno ooonomio data o tnoso tnroo oountrios aro
tno most important.
ndividual Country Budgot Doioits
FO Businoss Climato Survoy
Harmonizod ndox o Consumor Prioos (HCP)
M3 (moasuro o monotary supply traokod by tno Now York Fodoral Posorvo Bank and roportod ovory Tnursday)
Gorman Unomploymont
Gorman ndustrial Produotion


lcrci_r Currcrcic CuiHc. Crcnl lrilnir (lrilcH Kir_Hcn)

ECONOMC OvEPvEW
Tno Unitod Kingdom is tno world's ourtn largost ooonomy witn GDP valuod at ovor $1.4 trillion USD in 2001. Tno ooonomy is
vory noaltny, witn low unomploymont, oxpanding output and rosiliont oonsumption. Tno strongtn o oonsumor oonsumption nas
in largo part boon duo to a strong nousing markot, wnion is ourrontly 16 poroont abovo tno poak in 1988. Tno U.K. nas a
sorvioooriontod ooonomy, witn manuaoturing roprosonting an inoroasingly smallor portion o GDP, oquivalont to only onoitn
o its national output. t's oapital markot systoms aro ono o tno most dovolopod in tno world and, as a rosult inanoo and
banking, nas booomo tno strongost oontributors to GDP. Altnougn tno ma|ority o tno U.K.'s GDP is rom sorvioos, it is important
to know tnat tnoy aro also ono o tno largost produoors and oxportors o natural gas in tno EU. Tno onorgy produotion industry
aooounts or 10 poroont o GDP, ono o tno nignost snaros o any industrializod nation. Tnis is partioularly important, as
inoroasos in onorgy prioos, suon as oil, will signiioantly bonoit tno largo numbor o U.K. oil oxportors.
Ovorall, tno U.K. is a not importor o goods witn a oonsistont trado doioit. ts largost trading partnor is tno Europoan Union
(E.U.), witn trado botwoon tno two oonstituonoios aooounting or moro tnan 50 poroont o all o tno oountry's import and oxport
aotivitios. Tno U.S., on an individual basis, still romains tno U.K.'s largost trading partnor.
Tno oontral issuo tnat tno U.K. is grappling witn is wnotnor or not to |oin tno Euro. Tno dooision on Euro ontry nas signiioant
ramiioations or tno U.K. ooonomy. Currontly, tnis is tno koy politioal and ooonomio agonda on tno govornmont's plato. Tno
Troasury nas spooiiod ivo ooonomio tosts tnat must bo mot prior to Euro ontry.

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Most liquid cross
1 pip
Settlement
Groat Britisn Pound
Storling, Cablo
4 dooimal points
GBP / USD
4 pips (1.7000 / 1.7004)
.0001 USD
SPOT
GFT, Foroign Curronoios Guido, Groat Britain (Unitod Kingdom) p. 1 / 4
U.K.'S FvE ECONOMC TESTS FOP EUPO
1. s tnoro sustainablo oonvorgonoo in businoss oyolos and ooonomio struoturos botwoon tno U.K. and otnor Europoan Curronoy Unito
mombors (ECU) so tnat tno U.K. oitizons oould livo oomortably witn Euro intorost ratos on a pormanont basis?
2. s tnoro onougn loxibility to oopo witn ooonomio onango?
3. Would |oining tno ECU oroato an onvironmont tnat would onoourago irms to invost in tno U.K.?
4. Would |oining tno ECU navo a positivo inluonoo on tno oompotitivonoss o tno U.K.'s inanoial sorvioos industry?
5. Would |oining tno ECU bo good or promoting stability and growtn in omploymont?
Tno U.K. is a vory politioal oountry wnoro govornmont oioials aro nignly oonoornod witn votor approval. votors do not support Euro ontry, tno
likolinood o ECU ontry would doolino. Tno ollowing aro somo o tno argumonts or and against adopting tno Euro:
Arguments in favor of adopting the Euro:
Poduood oxonango rato unoortainty or U.K. businossos and lowor oxonango rato transaotion oosts or risks.
Tno prospoot o sustainod low inlation undor tno govornanoo o tno Europoan Contral Bank, snould roduoo long-torm intorost ratos
and stimulato sustainod ooonomio growtn.
Singlo ourronoy promotos prioo transparonoy.
Tno intogration o national inanoial markots o tno EU will load to nignor oioionoy in tno allooation o oapital in Europo.
Tno Euro is tno sooond most important rosorvo ourronoy ator tno USD.
Witn tno U.K. |oining tno Euro, tno politioal olout o tno EMU would inoroaso dramatioally.

Arguments against adopting the Euro:
Curronoy unions navo oollapsod in tno past.
Eoonomio or politioal instabilitios o ono oountry would aoot tno Euro, wnion would navo oxonango rato ramiioations or otnorwiso
noaltny oountrios.
Striot EMU oritoria.
Entry would moan a pormanont transor o domostio monotary autnority to tno Europoan Contral Bank.
Joining a ourronoy union witn no monotary loxibility would roquiro tno U.K. to navo moro loxibility in tno labor and nousing markots.
Ad|usting to now ourronoy will roquiro largo transaotion oosts.

Ono o tno primary roasons or not |oining tno Euro is tnat tno U.K. govornmont nas sound maoroooonomio polioios tnat navo workod vory woll or
tno oountry. Tnoir suooossul monotary and isoal polioios navo lod tnom to outpororm most ma|or ooonomios in tno ourront ooonomio downturn,
inoluding tno EU.
MONETAPY & FSCAL POLCY MAKEPS
Tno Bank o England (BoE) is tno Unitod Kingdom's oontral bank. Monotary polioios aro oontorod on aonioving an inlation targot diotatod by tno
Troasury Cnanoollor. Currontly, tnis targot is PPX (Potail Prioo ndox) inlation o 2.5 poroont. Tno oontral bank nas tno powor to onango intorost
ratos to lovols tnat tnoy boliovo will allow tnom to moot tnis targot. Tno MPC nolds montnly mootings, wnion aro olosoly ollowod or announoo-
monts on onangos in monotary polioy, inoluding onangos in tno intorost rato (bank ropo rato).
Tno MPC publisnos statomonts ator ovory mooting, along witn a quartorly nlation Poport dotailing tno MPC's orooasts or tno noxt two yoars o
growtn and inlation and |ustiioation or tnoir polioy movomonts. n addition, anotnor publioation, tno quartorly bullotin, providos inormation on
past monotary polioy movomonts and analysis o tno intornational ooonomio onvironmont and its impaots on tno U.K. ooonomy. All o tnoso roports
oontain dotailod inormation on tno MPC's polioios and biasos or uturo polioy movomonts.
MONETAPY & FSCAL POLCY MAKEPS (oontinuod)
The main poIicy tooIs used by the MPC and BoE are:
Bank Repo Rate: Tnis is tno koy rato usod in monotary polioy to moot tno Troasury's inlation targot. Tnis rato is sot or tno bank's own oporations
in tno markot, suon as tnoir snort torm londing aotivitios. Cnangos to tnis rato, aoot tno ratos sot by tno oommoroial banks or tnoir savors and
borrowors. n turn, tnis rato will aoot sponding and output in tno ooonomy, and ovontually oosts and prioos. An inoroaso in tnis rato would imply
an attompt to ourb inlation, wnilo a dooroaso in tnis rato would bo to stimulato growtn and oxpansion.
Open Market Operations: Tno goal o opon markot oporations is to implomont tno onangos in tno bank ropo rato, wnilo assuring adoquato
liquidity in tno markot and oontinuod stability in tno banking systom. Tnis is rolootivo o tno tnroo main ob|ootivos o tno BoE, maintaining tno
intogrity and valuo o tno ourronoy, maintaining tno stability o tno inanoial systom, and sooking to onsuro tno oootivonoss o tno Unitod
Kingdom's inanoial sorvioos. To onsuro liquidity, tno Bank oonduots daily opon markot oporations to buy or soll snort torm govornmont ixod-
inoomo instrumonts. tnis is not suioiont to moot liquidity noods, tno Bank would also oonduot additional ovornignt oporations.
MPOPTANT CHAPACTEPSTCS OF THE BPTSH POUND
GBP is very Iiquid
GBP/USD is ono o tno most liquid ourronoios in tno world, witn 6 poroont o all ourronoy trading involving GBP as oitnor tno baso or oountor
ourronoy. Ono o tno roasons or tno ourronoy's liquidity is tno oountry's nignly dovolopod oapital markots. Many oroign invostors sooking opportu-
nitios otnor tnan tno U.S. navo sont tnoir unds to tno U.K.
GBP carry trades
GBP nas ono o tno nignost intorost ratos among tno dovolopod oountrios. Australia and Now Zoaland navo nignor intorost ratos, but tnoir inanoial
markots aro not as dovolopod. As a rosult, many invostors wno aro ourrontly in or intorostod in partioipating in oarry trados, will buy GBP.
Interest rate differentiaIs between GiIts and foreign bonds are cIoseIy foIIowed
ntorost rato diorontials botwoon U.K. Gilts/U.S. Troasurios and U.K. Gilts/Gorman Bunds aro widoly watonod by orox markot partioipants. Tnoso
diorontials indioato now muon promium yiold U.K. ixod inoomo assots aro ooring ovor U.S. and Europoan (Gorman Bunds aro usually usod as
a baromotor or Europoan yiold) ixod inoomo assots, or vioo vorsa. Tnis diorontial providos tradors witn indioations o potontial ourronoy
movomonts, as invostors aro always looking or assots witn tno nignost yiolds.
EUPOSTEPLNG FUTUPES CAN GvE NDCATONS FOP NTEPEST PATE MOvEMENTS
Sinoo tno U.K. intorost rato or bank ropo rato is tno primary tool usod in monotary polioy, it is important to koop abroast o potontial onangos to
tno intorost rato. Commonts rom govornmont oioials aro ono way to gago biasos or potontial rato onangos, but tno BoE is ono o tno only oontral
banks tnat roquiro mombors o tno Monotary Polioy Committoo to publisn tnoir voting rooords. Tnis porsonal aooountability indioatos tnat
oommonts by individual oommittoo mombors roprosont tnoir own opinions and not tnat o tno BoE.
Tnorooro, it is nooossary to look or otnor indioation o potontial BoE rato movomonts. Tnroomontn Eurostorling uturos roloot markot oxpoota-
tions on Eurostorling intorost ratos tnroo montns into tno uturo. Tnoso oontraots aro also usoul in prodioting U.K. intorost rato onangos, wnion
will ultimatoly ooot tno GBP.
COMMENTS BY U.K. POLTCANS WLL AFFECT THE EUPO
Any spooonos, romarks (ospooially rom tno Primo Ministor or Troasury Cnanoollor) or polls in rogards to tno Euro will aoot tno ourronoy markots.
ndioation or adoption o tno Euro tonds to put downward prossuro on GBP, wnilo urtnor opposition to Euro ontry will typioally boost tno GBP.
Poason boing tnat in ordor or tno GBP to oomo in lino witn tno Euro, intorost ratos would navo to dooroaso signiioantly (at tno timo o tnis writing,
U.K. intorost ratos is 4 poroont, vorsus Euro intorost ratos o 2.75 poroont). A dooroaso in tno intorost rato, would induoo oarry trado invostors to
oloso tnoir positions, or in ossonoo soll GBP. GBP would also doolino booauso o tno unoortaintios involvod witn Euro adoption. Tno U.K. is
pororming vory woll undor tno dirootion o its ourront monotary autnority. Tno EMU is ourrontly onoountoring many diioultios witn mombor
oountrios broaoning EMU oritoria. Witn ono monotary autnority diotating 12 oountrios (plus U.K. would bo 13), tno EMU nas yot to provo tnat tnoy
navo dovolopod a monotary polioy suitablo or all mombor statos.
GBP HAS POSTvE COPPELATON WTH ENEPGY PPCES
Tno U.K. nousos somo o tno largost onorgy oompanios in tno world, inoluding Britisn Potroloum. Enorgy produotion roprosonts 10 poroont o
GDP. As a rosult, tno GBP nas a positivo oorrolation witn onorgy prioos. Spooiioally, sinoo many mombors o tno EU import oil rom tno U.K., as
oil prioos inoroaso, tnoy will navo to buy moro GBP to und tnoir onorgy puronasos. n addition, risos in tno prioo o oil will also bonoit tno oarnings
o tno nations' onorgy oxportors.
GBP CPOSSES EUP/GBP vEPSUS GBP/USD
Altnougn tno GBP/USD is moro liquid tnan EUP/GBP, tno EUP/GBP is typioally tno loading gago or GBP strongtn. Tno roason is booauso Britain's
primary trado and invostmont partnor is Europo. As a rosult, movos in tno EUP/GBP oross oan iltor into movomonts in GBP/USD. O oourso,
movomonts in GBP/USD will also aoot tno EUP/GBP rato. Tno EUP/GBP rato snould bo oxaotly oqual to tno rato o EUP/USD dividod by
GBP/USD. Small dioronoos in tnoso ratos aro oton oxploitod by markot partioipants.
MPOPTANT ECONOMC NDCATOPS FOP THE U.K.
Employmont Situation
Potail Prioo ndox (PPX)
ndustrial Produotion
Puronasing Managors ndox (PM)
U.K. Housing Starts


lcrci_r Currcrcic CuiHc. 'njnr

ECONOMC OvEPvEW
Japan is tno tnird largost ooonomy in tno world witn GDP valuod at ovor $4 trillion USD in 2002 (bonind tno U.S. and tno ontiro
Eurozono or EMU). Tno oountry is also ono o tno world's largost oxportors and is rosponsiblo or ovor $400 billion in oxports
por yoar. Manuaoturing and oxports aooount or noarly 20 poroont o GDP. Tnis nas rosultod in a oonsistont trado surplus,
wnion oroatos an innoront domand or tno JPY (dospito sovoro struotural doioionoios). Asido rom boing an oxportor, Japan is
also a largo importor o raw matorials or tno produotion o its goods. Tno primary trado partnors or Japan in torms o imports
and oxports aro tno U.S. and Cnina. Cnina is boooming an inoroasingly important trado partnor. n aot, Cnina's inoxponsivo
goods navo allowod it to gain a largor snaro o Japan's import markot.
JAPANESE BANKNG CPSS
n tno 1980s, Japan's oapital markot was ono o tno most attraotivo markots or intornational invostors sooking Asian invostmont
opportunitios.. Tno oountry nad tno most dovolopod oapital markots in tno rogion wnilo its banking systom was oonsidorod to
bo tno ono o strongost in tno world. At tno samo timo, tno oountry also oxporionood abovotrond ooonomio growtn and noar-
zoro inlation. Tnis rosultod in rapid growtn oxpootations, boostod assot prioos and rapid orodit oxpansion tnat lod to tno
dovolopmont o an "assot bubblo."
Botwoon 1990 and 97 tno assot bubblo oollapsod induoing a USD $10 trillion all in assot prioos, as woll as a all in roal ostato
prioos tnat aooountod or noarly 65 poroont o tno total doolino. Tno not loss was wortn two yoars o Japan's national output.
Tnis all in assot prioos sparkod tno banking orisis in Japan, wnion bogan in tno oarly 1990s and dovolopod into a ullblown
systomio orisis in 1997, ollowod by tno ailuro o a numbor o nignproilo inanoial institutions. Many o tnoso banks and
inanoial institutions oxtondod loans to tno buildors and roal ostato dovolopors at tno noignt o tno assot bubblo in tno 1980s
using tno land to bo built upon as tno oollatoral. A numbor o tnoso dovolopors doaultod ator tno assot bubblo oollapso loaving
tno oountry's banks saddlod witn bad dobt and oollatoral wortn somotimos 60 to 80 poroont loss tnan wnon tno loans woro
takon out. Duo to tno largo sizo o tnoso banking institutions and tnoir rolo in oorporato unding, tno orisis nad proound ooots
on tno Japanoso and global ooonomios. As a rosult, onormous bad dobts, alling stook prioos and a oollapsing roal ostato
sootor navo oripplod tno Japanoso ooonomy or almost two dooados.

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CONTACT :
Currency
Common Name
Most liquid cross
1 pip
Settlement
Japanoso Yon
Yon
2 dooimal points
USD / JPY
3 pips (110.70 / 110.73)
.01 JPY
SPOT
GFT, Foroign Curronoios Guido, Japan p. 1 / 3
JAPANESE BANKNG CPSS (oontinuod)
Witn Japan oxporionoing dolationary oonditions oaon suooooding montn o dolation raisod tno roal burdon o tno banks' outstanding dobt. To
dato, tno Japanoso Ministry o Finanoo and Bank o Japan aro still grappling witn tnis problom. As a rosult, tnoy navo only in|ootod oapital into
tnoso ailing banks as a solution to provont bankruptoios. Sinoo tno boginning o tno orisis, tnoy navo nopod tnat tno banks would grow tnoir way
baok to noaltn.
n addition to tno banking orisis, Japan nas tno nignost dobt lovol o all o tno industrializod oountrios, at moro tnan 140 poroont o its GDP. Dotorio-
rating isoal positions and publio dobt oontinuing to riso, Japan nas oxporionood ovor 10 yoars o stagnation posing risk o a liquidity orisis.
Tno banking sootor nas booomo nignly dopondont on a govornmont bailout. As a rosult, tno JPY is vory sonsitivo to politioal dovolopmonts suon
as spooonos by govornmont oioials witn rnotorio tnat may indioato potontial onangos in monotary and isoal polioy, attomptod bailout proposals,
and any otnor rumors.
Tno Bank o Japan (BoJ) is tno koy monotary polioymaking body in Japan. n 1998, tno Japanoso govornmont passod laws giving tno BoJ
oporational indopondonoo rom tno Ministry o Finanoo (MoF) and oomploto oontrol ovor monotary polioy. Howovor, dospito tno govornmont's
attompts to dooontralizo dooisionmaking, tno MoF still romains in onargo o oroign oxonango polioy. Tno BoJ is rosponsiblo or oxoouting all
oioial Japanoso oroign oxonango transaotions at tno dirootion o tno MoF. Monotary polioy mootings aro nold twioo a montn witn brioings and
pross roloasos providod immodiatoly. Tno BoJ also publisnos a montnly roport issuod by its polioy board, and a montnly ooonomio roport. Tnoso
roports aro important to waton or onangos in BoJ sontimont and signals o now monotary or isoal polioy moasuros sinoo tno govornmont is
oonstantly trying to dovolop initiativos to stimulato growtn.
Tno MoF and tno BoJ aro vory important institutions wno navo tno ability to aoot ourronoy movomonts. Sinoo tno MoF is tno dirootor o oroign
oxonango intorvontions, it is important to waton and koop abroast o tno oommonts mado rom MoF oioials. Boing an oxport drivon ooonomy, tno
MoF avors a woak JPY.
Tno most popular tool tnat tno BoJ usos to oontrol monotary polioy is tno ollowing:
Open Market Operations: Tnoso aotivitios aro oousod on oontrolling tno unoollatoralizod ovornignt oall rato. Sinoo tno disoount rato is zoro, tno
Bank o Japan oannot urtnor dooroaso tnis rato to stimulato growtn, oonsumption or liquidity. Tnorooro in ordor to maintain zoro intorost ratos,
tno BoJ nas to manipulato liquidity tnrougn opon markot oporations, targoting zoro intorost on tno ovornignt oall rato. Tnoy manipulato liquidity by
tno outrignt buying or solling o bills, ropos or Japanoso govornmont bonds. A ropo transaotion involvos a oasn takor (borrowor) solling soouritios
to a oasn providor (londor) wnilo agrooing to ropuronaso tno soouritios o tno samo typo and quantity at a lator dato. Tnis struoturo is similar to a
soourod loan wnoroby tno oasntakor must pay tno oasn providor intorost. Popo transaotions tond to navo vory snort maturitios ranging rom ono
day to a ow wooks.
n torms o isoal polioy, tno Bank o Japan is ourrontly oonsidoring a numbor o motnods to doal witn tnoir nonpororming loans. Tnis inoludos
inlation targoting, nationalizing a portion o privato banks and ropaokaging tno banks' bad dobt and solling tnom at a disoount. No polioios navo
boon dooidod upon, but tno govornmont is aggrossivoly oonsidoring all o tnoso and otnor altornativos.

MPOPTANT CHAPACTEPSTCS OF THE JPY
Proxy for Asian strength / weakness
Japan is a proxy or Asian strongtn booauso tnoy navo tno largost GDP in Asia. Witn tno most dovolopod oapital markots, Japan
was onoo tno primary dostination or all invostors wno wantod aoooss into tno rogion. Japan also oonduots a signiioant amount
o trado witn its Asian partnors. As a rosult, ooonomio probloms or politioal instability in Japan, tond to spill ovor into tno otnor
Asian oountrios. Howovor, tnis spillovor is not onosidod. Eoonomio or politioal probloms in otnor Asian ooonomios oan also
navo dramatio impaots on tno Japanoso ooonomy and nonoo, JPY movomonts. For oxamplo, witn Nortn Koroan politioal
instability, Japan and tno JPY aro at tno groatost risk o tno G7 oountrios, as tnoy navo tno strongost tios to Nortn Koroa.
Bank of Japan intervention practices
Tno BoJ and MoF aro vory aotivo partioipants in tno FX markots. Tnat is, tnoy navo a longtny nistory o ontoring tno FX markots
i tnoy aro dissatisiod witn tno ourront JPY lovol. Poriodioally tnoy roooivo inormation on largo nodgo und positions rom banks
and liko to intorvono wnon spooulators aro on tno otnor sido o tno markot, allowing tnom to got tno most "bang or tno buoks."
Tnoro aro typioally tnroo main aotors bonind BoJ and MoF intorvontion:
1. Amount o approoiation/doprooiation in JPY
2. Curront USD/JPY rato
3. Dirootion o spooulativo positions
JPY movements are sensitive to time; FiscaI year end, Japanese trading hours
JPY orossos oan booomo vory aotivo towards tno ond o tno Japanoso isoal yoar (Maron 31), as oxportors ropatriato tnoir dollar
donominatod assots. Tnis is partioularly important or Japanoso banks booauso tnoy nood to robuild tnoir balanoo snoots to
moot FSA guidolinos, wnion roquiro tno banks to mark to markot tnoir soourity noldings.
Japanoso tradors tond to tako nour-long lunonos botwoon 10pm11pm EST, loaving only a |unior trador in tno oioo. Tnorooro,
tno Japanoso lunontimo oan bo volatilo, as tno markot gots vory illiquid. During Japanoso and London nours, tno JPY tonds to
movo airly ordorly unloss broaking announoomonts or govornmont oioial oommonts aro mado or surprising ooonomio data is
roloasod. During U.S. nours nowovor, tno JPY tonds to navo nignor volatility.
Banking stocks are wideIy watched
Sinoo tno orux o Japan's ooonomio orisis stoms rom tno non-pororming loans (NPL) o tno Japanoso banks, banking stooks
aro olosoly watonod by FX markot partioipants. Any tnroat o doault by tnoso banks, disappointing oarnings or urtnor roports
o signiioant NPLs oan indioato ovon doopor probloms or tnoy ooonomy. Tnorooro, bank stook movomonts oan load JPY
movomonts.
Carry trade effects
Tno popularity o oarry trados nas inoroasod in rooont yoars, as invostors aro aotivoly sooking nign yiolding assots. Witn JPY
naving tno lowost intorost rato o all industrializod oountrios, it is tno primary ourronoy sold or "borrowod" in oarry trados.
MPOPTANT ECONOMC NDCATOPS FOP JAPAN
Gross Domostio Produot
Tankan Survoy
Balanoo o Paymonts
Employmont


lcrci_r Currcrcic CuiHc. Ncv ZcnlnrH

ECONOMC OvEPvEW
Now Zoaland is a vory small ooonomy witn GDP valuod at approximatoly $50 billion USD in 2001. Tno oountry's population is
aotually oquivalont to loss tnan nal o tno population o Now York City. t was onoo ono o tno most rogulatod oountrios witnin
tno OECD (Organization or Eoonomio Cooporation and Dovolopmont), but ovor tno past two dooados nas boon moving
towards an opon, modorn and stablo ooonomy.
Now Zoaland also nas nignly dovolopod manuaoturing and sorvioos sootors, witn tno agrioultural industry driving tno bulk o
tno oountry's oxports. Tno ooonomy is strongly tradooriontod, witn oxports o goods and sorvioos roprosonting approximatoly
ono tnird o GDP. Duo to tno small sizo o tno ooonomy and its signiioant trado aotivitios, Now Zoaland is nignly sonsitivo to
global porormanoo, ospooially as it rolatos to its koy Asian trading partnors, Australia and Japan. Togotnor, Australia and Japan
roprosont 30 poroont o Now Zoaland's trading aotivity. During tno Asian Crisis, Now Zoaland's GDP oontraotod by 1.3 poroont
as a rosult o roduood domand or oxports, and two oonsooutivo drougnts rom roduood agrioultural and rolatod produotion.

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CONTACT :
Currency
Common Name
Most liquid cross
1 pip
Settlement
Now Zoaland Dollar
Kiwi
4 dooimal points
NZD / USD
5 pips (0.6200 / 0.6205)
.0001 USD
SPOT
GFT, Foroign Curronoios Guido, Now Zoaland p. 1 / 3
Tno Posorvo Bank o Now Zoaland (PBNZ) is tno monotary polioy autnority o Now Zoaland. Mootings on monotary polioy ooour
oignt timos a yoar or approximatoly ovory six wooks. Unliko most otnor oontral banks, tno dooision or rato onangos rosts
ultimatoly on tno bank's govornor. Tno ourront polioy targot agroomonts sot by tno ministor and tno govornor oous on maintain-
ing polioy stability and avoiding unnooossary instability in output, intorost ratos and tno oxonango rato. Prioo stability roors to
maintaining tno annual oonsumor prioo indox (CP) inlation at 1.5 poroont. tno PBNZ doos not moot tnis targot, tno govorn-
mont nas tno ability to dismiss tno govornor o tno PBNZ, tnougn tnis is raroly dono. Tnis sorvos as a strong inoontivo or tno
PBNZ to moots its inlation targot. Tno most oommon tools usod by tno PBNZ to implomont monotary polioy onangos aro tno
ollowing:
OfficiaI Cash Rate (OCR): Tnis is tno rato sot by tno PBNZ to implomont monotary polioy. Tno bank londs ovornignt oasn at 25
basis points abovo tno OCP rato and roooivos doposits or pays intorost at 25 basis points bolow tnis rato. By oontrolling tno
oost o liquidity or oommoroial banks, tno PBNZ oan inluonoo tno intorost ratos oorod to individuals and oorporations. Tnis
oootivoly oroatos a 50 basis point oorridor tnat bounds tno intorbank ovornignt rato. Banks ooring unds abovo tno uppor
bound will attraot ow takors booauso unds oan bo borrowod or a lowor oost rom tno PBNZ. Also, banks ooring ratos bolow
tno lowor bound will also attraot ow takors, booauso tnoy aro ooring lowor yiolds tnan tno PBNZ. Tno oioial oasn rato is
roviowod and manipulatod to maintain ooonomio stability.
Open Market Operations: Tnis is usod to moot tno oasn targot. Tno oasn targot is tno targotod amount o rosorvos nold by
rogistorod banks. Tno ourront targot is NZ$20 million. Tno PBNZ proparos orooasts o daily luotuations on tno oasn targot and
tnon will uso tnoso orooasts to dotormino tno amount o unds to in|oot or witndraw in ordor to moot tno oasn targot.
MPOPTANT CHAPACTEPSTCS OF THE NEW ZEALAND DOLLAP
Strong correIation with AUDcompetition with AustraIia
Australia is Now Zoaland's largost trading partnor. Tnis tiod witn tno proximity o tno oountrios and tno aot tnat Now Zoaland is
nignly tradooriontod, oroatos strong tios botwoon tno two oountrios. Wnon tno Australian ooonomy doos woll and Australian
oorporations inoroaso tnoir importing aotivitios, Now Zoaland is ono o tno irst to bonoit. n aot, sinoo 1999, tno Australian
ooonomy nas dono vory woll, witn or oxamplo, a booming nousing markot tnat oroatod a nood to inoroaso imports o building
produots. As a rosult, tnis strongtn translatod into Australia importing 10 poroont moro goods rom Now Zoaland botwoon 1999
and 2002.
Commodity-Iinked currency
Now Zoaland is an oxport drivon ooonomy witn oommoditios roprosonting ovor 40 poroont o tno oountry's oxports. As a rosult,
tno ourronoy nas a 50 poroont positivo oorrolation witn oommodity prioos. As oommodity prioos inoroaso, tno NZD will also
approoiato. Tno oorrolation botwoon AUD and NZD also oontributos to tno NZD's status as a oommoditylinkod ourronoy. AUD
ooonomio porormanoo is also nignly oorrolatod witn oommodity prioos. Tnorooro, as oommodity prioos inoroaso, tno Austra-
lian ooonomy bonoits translating into inoroaso aotivity in all aspoots o tno oountry's oporations, inoluding trado witn Now
Zoaland.
Carry trades
Witn tno nignost intorost rato o tno industrializod oountrios, tno NZD nas boon ono o tno most popular ourronoios to buy or
oarry trados.
ntorost rato diorontials botwoon tno oasn ratos o Australia and tno snorttorm intorost rato yiolds o otnor industrializod
oountrios aro olosoly ollowod.
ntorost rato oan bo good indioators o potontial monoy lows as tnoy indioato now muon promium yiold NZD snorttorm ixod
inoomo assots aro ooring ovor oroign snorttorm ixod inoomo assots, or vioo vorsa. Tnis diorontial providos tradors witn
indioations o potontial ourronoy movomonts, as invostors aro always looking or assots witn tno nignost yiolds.
POPULATON MGPATON
Now Zoaland nas a vory small population. Tnorooro inoroasos in migration into tno oountry oan navo signiioant ooots on tno
ooonomy. From 2002 to 2003, tno population o Now Zoaland inoroasod by 37,500 pooplo vorsus an inoroaso o 1,700 botwoon
2001 and 2002. Tnis strong population migration into Now Zoaland nas oontributod signiioantly to tno porormanoo o tno
ooonomy, booauso as tno population inoroasos, tno domand or nousonold goods inoroasos, loading to an inoroaso in ovorall
oonsumor oonsumption.
Sinoo tno bulk o Now Zoaland's oxports aro oommoditios, tno oountry's GDP is nignly sonsitivo to sovoro woatnor oonditions
tnat may damago tno oountry's arming aotivitios. n 1998, drougnts oost tno oountry ovor $50MM. n addition, drougnts aro also
vory roquont in Australia, Now Zoaland's largost trading partnor. Tnoso drougnts navo oost Australia up to 1 poroont in GDP,
wnion also translatod into a nogativo aoot on tno Now Zoaland ooonomy.
MPOPTANT ECONOMC NDCATOPS FOP NEW ZEALAND
Balanoo o Goods and Sorvioos
Privato Consumption


lcrci_r Currcrcic CuiHc. ~vilzcrlnrH

ECONOMC OvEPvEW
Switzorland is tno 19tn largost ooonomy in tno world, witn GDP valuod o moro tnan $240 billion USD in 2001. Tno ooonomy is
rolativoly small, but it is ono o tno woaltniost in tno world on a GDP por oapita basis. Tno oonidontiality oorod by tno Swiss
banking systom oouplod witn tno oountry's longtny nistory o politioal noutrality nas oroatod a sao navon roputation or tno
oountry and its ourronoy. As a rosult, Switzorland is tno world's largost dostination or osnoro oapital. Tno oountry nolds ovor
U.S. $2 trillion in osnoro assots and is ostimatod to attraot moro tnan 35 poroont o tno world's privato, woaltnmanagomont
businoss. Tnis nas oroatod a largo and nignly advanood banking and insuranoo industry tnat omploys at loast 50 poroont o tno
population and oomprisos moro tnan 70 poroont o tno total GDP. Sinoo Switzorland's inanoial industry tnrivos on its sao navon
status and ronownod oonidontiality, oapital lows tond to drivo tno ooonomy during timos o global risk avorsion wnilo trado
lows drivo tno ooonomy during a risksooking onvironmont. Tnorooro, trado lows aro important witn noarly two tnirds o all
trado oonduotod witn Europo.
Tno Swiss National Bank (SNB) is tno monotary polioy autnority o Switzorland. All dooisions aro basod on a oonsonsus voto.
Tno SNB board roviows monotary polioy at loast onoo a quartor, but dooisions on monotary polioy oan bo mado and announood
at any point in timo. Unliko most otnor oontral banks, tno SNB doos not sot ono oioial intorost rato targot, but instoad sots a
targot rango or tnoir tnroo montn Swiss LBOP rato (London ntorbank Oor Pato). Tno Swiss LBOP rato is sot basod upon tno
nood or maintaining an inlation targot o loss tnan 2 poroont inlation por yoar.
Tno SNB also olosoly monitors oxonango ratos, as oxoossivo strongtn in tno Swiss rano oan oauso inlationary oonditions. Tnis
is ospooially truo in onvironmonts o global risk avorsion, as oapital lows into Switzorland inoroasos signiioantly during tnoso
timos. As a rosult, tno SNB typioally avors a woak rano, and is not nositant to uso intorvontion as liquidity tool. SNB oioials
intorvono in tno rano using a varioty o motnods inoluding vorbal romarks on liquidity, monoy supply and tno ourronoy.

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Currency
Common Name
Most liquid cross
1 pip
Settlement
Switzorland Frano
Swiss
4 dooimal points
USD / CHF
8 pips (1.3300 / 1.3308)
.0001 CHF
SPOT
GFT, Foroign Curronoios Guido, Switzorland p. 1 / 3
MONETAPY & FSCAL POLCY MAKEPS (oontinuod)
Tno most oommonly usod tools by tno SNB to implomont monotary polioy inoludo tno ollowing:
Target Interest Rate Range: Tno SNB implomonts monotary polioy by sotting a targot rango or tnoir tnroomontn intorost rato
(tno Swiss LBOP rato). Tnis rango typioally nas a 100 basis point sproad and is rovisod at loast onoo ovory quartor. Tnis rato
is usod as tnoir targot booauso it is tno most important monoy markot rato or Swiss rano invostmonts. Cnangos to tnis targot
aro aooompaniod witn a oloar oxplanation rogarding tno onangos in tno ooonomio onvironmont.

Open Market Operations: Popo transaotions aro tno SNB's ma|or monotary polioy instrumont. A ropo transaotion involvos a
oasn takor (borrowor) solling soouritios to a oasn providor (londor) wnilo agrooing to ropuronaso tno soouritios o tno samo typo
and quantity at a lator dato. Tnis struoturo is similar to a soourod loan wnoroby tno oasn takor must pay tno oasn providor
intorost. Tnoso ropo transaotions tond to navo vory snort maturitios ranging rom ono day to a ow wooks. Tno SNB usos tnoso
ropo transaotions to manipulato undosirablo movos in tno tnroo montn LBOP rato. To provont inoroasos in tno tnroo montn
LBOP rato abovo tno SNB's targot, tno bank would supply tno oommoroial banks witn additional liquidity tnrougn ropo transao-
tions at lowor ropo ratos, and in ossonoo oroato additional liquidity. Convorsoly, tno SNB oan roduoo liquidity or induoo
inoroasos in tno tnroo montn LBOP rato by inoroasing ropo ratos.

Tno SNB publisnos a quartorly bullotin witn a dotailod assossmont o tno ourront stato o tno ooonomy and a roviow o monotary
polioy. n addition, a montnly bullotin is also publisnod tnat oontains a snort roviow o tno SNB's ooonomio dovolopmonts. Tnoso
roports aro important to waton booauso tnoy may oontain inormation on onangos in tno SNB's assossmont o tno ourront
domostio situation.
MPOPTANT CHAPACTEPSTCS OF THE SWSS FPANC
Safe Haven Status
Tno koy advantagos o Switzorland aro its sao-navon status and tno soorooy o its banking systom. Tno Swiss rano movos
primarily on oxtornal ovonts ratnor tnan domostio ooonomio oonditions. Tnat is, as montionod oarlior, duo to its politioal noutral-
ity, tno rano is oonsidorod tno world's promior sao-navon ourronoy. Tnorooro, in timos o global instability and/or unoortainty,
invostors tond to bo moro oonoornod witn oapital rotontion tnan approoiation. During suon timos, unds will low into Switzorland
and oauso tno Swiss rano to approoiato.
Swiss Franc is correIated with goId
Switzorland is tno world's ourtn largost oioial noldor o gold. Tnis is duo to tno aot tnat tno Swiss oonstitution uso to navo a
mandato roquiring tno ourronoy to bo baokod 40 poroont witn gold rosorvos. Tno link to gold romains in tno minds o Swiss
invostors. As a rosult, tno Swiss rano nas oloso to an 80 poroont positivo oorrolation witn gold. Tnorooro i tno gold prioo appro-
oiatos, tno Swiss rano nas a nign likolinood o approoiating as woll. n addition, sinoo gold is also viowod as tno ultimato sao-
navon orm o monoy, gold and tno Swiss rano snould oontinuo to bonoit as global ooonomio and goopolitioal unoortainty
oontinuos.
Carry trades effects
Tno popularity o oarry trados nas inoroasod in rooont yoars as invostors aro aotivoly sooking nign-yiolding assots. Witn CHF
naving ono o tno lowost intorost ratos o all industrializod oountrios, it is ono o tno primary ourronoios sold or "borrowod" in
oarry trados.
Interest rate differentiaIs between Euro and Swiss futures and foreign interest rate futures are cIoseIy foIIowed
ntorost rato diorontials aro good indioators o potontial monoy lows sinoo tnoy indioato now muon yiold promium U.S. ixod
inoomo assots aro ooring ovor Swiss ixod inoomo assots or vioo vorsa. Tnis diorontial providos tradors witn indioations o
potontial ourronoy movomonts, as invostors aro always looking or assots witn tno nignost yiolds.

MPOPTANT CHAPACTEPSTCS OF THE SWSS FPANC (oontinuod)
PotentiaI changes in banking reguIations negativeIy weigh on CHF
Tno Europoan Union nas rooontly boon putting signiioant prossuro on Switzorland to rolax tno oonidontiality o tnoir banking
systom and to inoroaso transparonoy o tnoir oustomors' aooounts. Switzorland is ourrontly grappling witn tnis issuo booauso
tno oonidontiality o tnoir oustomors' aooounts is tno ooro strongtn o tnoir banking systom. Any nows or talk o onanging
banking rogulations will likoly aoot Switzorland's ooonomy and tno Swiss rano.
Mergers and acquisitions are common in SwitzerIand's banking and insurance sectors
Switzorland's primary industry is banking and inanoo. Witn tno rooont oonsolidation in tno ovorall industry, morgor and aoquisi-
tion aotivitios aro vory oommon. Tnoso M&A aotivitios oan navo signiioant inluonoo on CHF spot prioos. oroign irms
puronaso Swiss banks or insuranoo oompanios, tnoy will nood to buy CHF and soll tnoir looal ourronoy. Swiss banks puronaso
oroign irms, tnoy will nood to soll CHF and buy tno oroign ourronoy.
Cross currency characteristicsEUR/CHF versus USD/CHF
Tno EUP/CHF is tno most oommonly tradod ourronoy or tradors wno want to partioipato in CHF movomonts. Tno USD/CHF nas
nignor illiquidity and volatility. Howovor, daytradors may tond to avor USD/CHF ovor EUP/CHF booauso o its volatilo
movomonts. n aotuality, tno USD/CHF is only a syntnotio ourronoy dorivod rom EUP/USD and EUP/CHF. Markotmakors or
proossional tradors tond to uso tnoso pairs as loading indioators or trading USD/CHF or to prioo tno ourront USD/CHF lovol
wnon tno ourronoy pair is illiquid. Tnoorotioally, tno USD/CHF rato snould bo oxaotly oqual to EUP/CHF dividod by EUP/USD.
Only during timos o sovoro global risk avorsion, liko tno ovonts tnat took plaoo in tno U.S on Soptombor 11, 2001, will tno
USD/CHF dovolop a markot o its own. Pogardloss, any small dioronoos in tnoso ratos aro quiokly oxploitod by markot partioi-
pants.
MPOPTANT ECONOMC NDCATOPS FOP SWTZEPLAND
Balanoo o Paymonts
M3 (moasuro o monotary supply traokod by tno Now York Fodoral Posorvo Bank and roportod ovory Tnursday)
Unomploymont
Produotion ndox (ndustrial Produotion)


lcrci_r Currcrcic CuiHc. lrilcH ~lnlc

ECONOMC OvEPvEW
Tno Unitod Statos is tno world's loading ooonomio powor, witn GDP valuod at ovor $10 trillion USD in 2001. Tnis is tno nignost
GDP in tno world and basod upon puronasing powor parity (PPP), it is tnroo timos tno sizo o Japan's output, ivo timos tno sizo
o Gormany's and sovon timos tno sizo o tno Unitod Kingdom's GDPs. Witn tno U.S. naving tno most liquid oquity and ixod
inoomo markots in tno world, oroign invostors navo oonsistontly inoroasod tnoir puronasos o U.S. assots. Foroign diroot invost-
monts roprosont approximatoly 40 poroont o total global not inlows or U.S. On a not basis, tno U.S. absorbs 71 poroont o total
oroign savings.
Tno import and oxport volumo o tno U.S. also oxooods tnat o any otnor oountry. On a nottod basis, tno U.S. is running a vory
largo trado doioit o noarly $500bln. Tnis is booauso tno U.S. is tno largost trading partnor or most oountrios, roprosonting 20
poroont o total world trado.
Tnis largo absoluto numbor indioatos tnat tno U.S. is noavily roliant on oapital lows and tno dollar is vory sonsitivo to onangos
in tnoso lows. n aot, in ordor to provont a urtnor doolino in tno USD as a rosult o trado, tno U.S. would nood to attraot oloso
to $1.9bn in oapital inlows por day.
Tno U.S. is primarily a sorvioooriontod oountry witn noarly 80 poroont o tnoir GDP ooming rom roal ostato, transportation,
inanoo, noaltnoaro, and businoss sorvioos. Witn tno advont o now toonnology suon as tno intornot, produotivity in tno U.S. nas
oonsistontly inoroasod. Tnis is partioularly intorosting in lignt o tno U.S.'s rooont ooonomio downturn, booauso many ooono-
mists arguo tnat dospito tno ourront downturn, inoroasod produotivity indioatos tnat wo aro in a "now ooonomy." Tno importanoo
o tnis oommont is tnat i tno U.S. is indood in a "now ooonomy," provious roaotions to rooossionary oonditions may not ropoat
tnomsolvos in tnis downturn.

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Currency
Common Name
Most liquid cross
1 pip
Settlement
U.S. Dollar
Dollar
2 dooimal points
USD / JPY, EUP / USD
3 pips (110.70 / 110.73), (1.1570 / 1.1573)
.01 JPY, .0001 USD
SPOT
GFT, Foroign Curronoios Guido, Unitod Statos p. 1 / 3
Tno Fodoral Posorvo Board (Fod) is tno oontral bank o tno Unitod Statos. Tno Fod is rosponsiblo or sotting and implomonting
monotary polioy. Tno FOMC nolds 8 mootings por yoar tnat aro widoly watonod or intorost rato announoomonts or onangos in
growtn oxpootations.
Tno Fodoral Posorvo issuos a biannual monotary polioy roport in Fobruary and July ollowod by tno HumpnroyHawkins
tostimony wnoro tno Fodoral Posorvo Cnairman rosponds to quostions rom tno Congross and tno Banking Committoos tno MP
roport boing publisnod. Tnis roport is important to waton booauso it oontains tno FOMC orooasts or GDP growtn, inlation and
unomploymont.
Tno Fod, unliko most otnor oontral banks, nas a mandato or "longrun ob|ootivos" o prioo stability and sustainablo ooonomio
growtn. n ordor to adnoro to tnoso goals, tno Fod nas to uso monotary polioy to limit inlation, unomploymont and to aoniovo
balanood growtn. Tno most popular tools tnat tno Fod usos to oontrol monotary polioy inoludo tno ollowing:
Opon Markot Oporations: Tnoso involvo Fod puronasos o govornmont soouritios, inoluding Troasury bills, notos and bonds.
Tnis usod to bo ono o tno most popular motnods or tno Fod to signal and implomont polioy onangos. As tno Fod puronasos
govornmont soouritios, tnoy in ooot dooroaso intorost ratos. Wnon tno Fod solls govornmont soouritios, intorost ratos inoroaso.
Fod Funds Targot: Tno FFT is tno intorost rato tnat is tno koy polioy targot o tno Fod. t is in ossonoo, rato tnat tno U.S. oontral
bank and tno Fod onargos on ovornignt loans botwoon banks. Tno Fod tonds to inoroaso tnis rato to ourb inlation or dooroaso
tnis rato to promoto growtn and oonsumption. Cnangos in tnis rato tond to imply ma|or onangos in polioy and typioally navo
largo ramiioations or global ixod inoomo and oquity markots.
Tno U.S. Troasury is rosponsiblo or issuing govornmont dobt and or making isoal polioy dooisions. Fisoal polioy dooisions
inoludo dotormining tno appropriato lovol o taxos and govornmont sponding. Tno U.S. Troasury is tno aotual govornmont body
tnat dotorminos dollar polioy. Tno U.S. Troasury ultimatoly instruots tno NY Fodoral Posorvo Board wnotnor to intorvono in tno
oroign oxonango markot by pnysioally solling or buying USD to aoot tno ourronoy's valuo. Tnorooro, tno Troasury's viow on
dollar polioy and onangos to tnat viow aro vory important to tno ourronoy markot. Ovor tno oourso o tno past ow dooados, tno
Troasury and Fod oioials navo maintainod a "strong dollar" bias.
MPOPTANT CHAPACTEPSTCS OF THE U.S. DOLLAP
Moro tnan 90 poroont o all ourronoy doals involvo tno USD.
Prior to Soptombor 11, 2001, tno USD was oonsidorod ono tno world's promior "saonavon" ourronoios.

Howovor, postSopt.11 oroign noldors o U.S. assots, inoluding oontral banks, navo parod tnoir USD noldings as a rosult o
inoroasod U.S. unoortainty and dooroasod intorost ratos.
GoId and USD tend to have inverse reIationships.
Tnis invorso rolationsnip is dovolopod as a rosult o tno aot tnat gold is moasurod in dollars. Pooont USD doprooiation duo to
global unoortainty nas boon tno primary roason or gold approoiation, as gold is oommonly viowod as tno ultimato orm o
monoy.
Many emerging market countries "peg" their IocaI currencies to the USD.
Pogging a ourronoy to tno USD portains to tno basio idoa tnat a govornmont agroos to maintaining tno USD as a rosorvo
ourronoy by ooring to buy or soll any amount o domostio ourronoy at tno poggod rato or tno rosorvo ourronoy. n addition, tno
govornmont typioally must also promiso to nold rosorvo ourronoy at loast oqual to tno amount o looal ourronoy in oiroulation.
Countrios witn ourronoios poggod to tno USD inoludo Moxioo and Cnina. Tnis is partioularly important booauso oountrios suon
as tnoso will tako an aotivo intorost in managing tnoir ixod or loating pogs. Any luotuations boyond tnis band will bo sub|oot
to intorvontion by tno oontral bank, wnion will inoludo buying or solling USD.

MPOPTANT CHAPACTEPSTCS OF THE U.S. DOLLAP (oontinuod)
The Treasury and Fed favor a "strong doIIar" poIicy.
Interest Rate DifferentiaIs between U.S. treasuries and foreign bonds strongIy foIIowed.
Tno intorost rato diorontials botwoon U.S. troasurios and oroign bonds aro important to ollow duo to it boing a strong indioator
o potontial ourronoy movomonts, and invostors aro looking or assots witn tno nignost yiolds. As yiolds in tno U.S. dooroaso or
i yiolds abroad inoroaso, tnis would induoo invostors to soll tnoir U.S. assots and puronaso oroign assots. Solling U.S. ixod
inoomo or oquity assots would inluonoo tno ourronoy markot booauso tnat would roquiro solling tno USD and buying tno oroign
ourronoy. U.S. yiolds inoroaso or oroign yiolds dooroaso, invostors would bo moro inolinod to puronaso U.S. assots, tnorooro
boosting tno USD.
USD Index.
Markot partioipants olosoly ollow tno U.S. Dollar ndox as a gago to ovorall USD strongtn or woaknoss.
U.S. currency trading impacted by stock and bond markets.
Tnoro is a strong, positivo oorrolation botwoon a oountry's oquity and ixod inoomo markots and its ourronoy.
MPOPTANT ECONOMC NDCATOPS FOP THE U.S.
All o tno ollowing ooonomio indioators aro important or tno U.S. Howovor, sinoo tno U.S. is a sorvioooriontod ooonomy, it is
important to pay partioular attontion to numbors or tno sorvioo sootor.
Employmont
Produoors Prioo ndox (PP)
ntornational Trado
Employmont Cost ndox (CP)
nstituto o Supply Managors (Formorly NAPM)
Consumor Conidonoo
Potail Salos


lcrci_r Currcrcic CuiHc. Clirn

Tno yuan, CNY, spot FX markot is limitod to onsnoro oompanios and inanoial institutions. t is not tradod osnoro. Tno USD/CNY
rato is olosoly managod by tno oontral bank (PBOC) at around 8.2770 ourrontly. Tnoro navo boon oalls or tno Cninoso govorn-
mont to rovaluo its ourronoy but tnat nas mot rosistanoo. As tno govornmont oontinuos to roorm its ooonomio polioios and
strongtnon its banking systoms tangont to tno oontral bank tnoro snould bo a roalistio oall or oponing up spot trading. Howovor,
tnis will tako somo timo. Oioially, tno systom is oallod a managod loat and not a USD pog. Tnoro is no CNY orward markot,
only spot FX. Tno non dolivorablo orward markot is not tradod onsnoro. Tnoro is no intorbank monoy markot boyond 4 montns.
Tno bond markot is rostriotod to dosignatod onsnoro inanoial institutions only and is not liquid.

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Currency
Most liquid cross
Best Liquidity
1 pip
Average Daily Trading Volume
Cninoso Yuan
2 dooimal points
USD / CNY
0130 0230 GMT
500 pips (8.2270 8.2770)
0.001 CNY
U.S. $200m
Settlement Transaotion plus ono day ( T+1)
SPOT
GFT, Foroign Curronoios Guido, Cnina p. 1 / 1

lcrci_r Currcrcic CuiHc. Czccl Rcjullic

Tno Czoon koruna is a oonvortiblo ourronoy tnat nas boon roo loating sinoo May 1997. Foroign invostors navo unrostriotod
aoooss to tno looal markots. London banks aro vory aotivo in ourronoy trading, wnion is ostimatod to aooount or 60 poroont o
daily turnovor. Tno doposit markot is also vory liquid and oroignors doal aotivoly. ntorost rato swaps (PS) aro also availablo up
to 15 yoars. Tno markot is most liquid up to 5 yoars. Tno PS markot is mostly drivon by osnoro banks.

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CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Czoon Koruna
3 dooimal points
EUP / CZK
0900 1700 GMT
40 pips (32.5220 32.5260)
0.001 CZK
EUP $23bn
Settlement Transaotion plus two days ( T+2)
SPOT
GFT, Foroign Curronoios Guido, Czoon Popublio p. 1 / 1

lcrci_r Currcrcic CuiHc. lcr_ Kcr_

USD/HKD is a managod loating ourronoy at a rato o around 7.8 HKD por USD. Tno normal band oonsists o 1 poroont luotua-
tion allowanoo. Tnoro is muon spooulation about tno possibilitios o roo loating tnis ourronoy wnion will most likoly ooinoido witn
and bo linkod to tno progross and roorms o tno CNY. No distinotion is mado botwoon looal and osnoro trading. Tnoro is no
NDF markot. FX options aro availablo. Tnoro aro no spot or orward trading rostriotions but dooumontation is roquirod. Tnoro is
a liquid govornmont bond markot (Exonango Fund Notos) witn maturitios o up to 10 yoars. ntorost rato swaps and options aro
liquid up to 10 yoars.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Hong Kong Dollar
4 dooimal points
USD / HKD
0130 0830 GMT
15 pips (7.7985 7.8000)
0.0001 HKD
U.S. $1.5bn
SPOT
GFT, Foroign Curronoios Guido, Hong Kong p. 1 / 1

lcrci_r Currcrcic CuiHc. lur_nr,

Until May 2001, tno orint, HUF, was tno most rostriotod ourronoy in tno rogion, managod by a orawling pog against tno EUP,
witn .3 poroont dovaluation por montn witnin a band o +/- 2.25 poroont rom tno oontral parity. n May 2001, tnis band was
widonod to +/- 15 poroont and in Juno was mado ully oonvortiblo or ourront and oapital aooount transaotions. Tnougn tno
widor band is still in oporation tno HUF is now ossontially in a roo loat rogimo around a oontral parity o 276.1. Postriotions on
oroign noldings o monoy markot instrumonts navo also boon litod allowing osnoro invostors to go snort HUF.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Hungarian Forint
2 dooimal points
USD / HUF & EUP / HUF
0900 1600 GMT
150 pips USD / HUF (208.50 210.00)
300 pips EUP / HUF (267.50 270.50)
0.01 HUF
EUP 500700m
SPOT
GFT, Foroign Curronoios Guido, Hungary p. 1 / 1

lcrci_r Currcrcic CuiHc. lrHin

Tno oxonango rato o tno rupoo, NP, is dotorminod in tno intorbank markot. Sinoo January 2000 tnis nas boon managod by tno
Posorvo Bank o ndia and is olassiiod as a managod loat rogimo. Looal and osnoro trado is diorontiatod in tnat dooumonta-
tion is roquirod or botn spot and orward x or osnoro trading. t is a widoly nold bolio tno NP will bo among tno irst omorging
markots to booomo spot oligiblo witnout rostriotions or dooumontation. NDFs aro availablo and FX options navo |ust booomo
availablo. Tnoro aro somo trading rostriotions and dooumontation is roquirod. Spot x sottlomont is TPANSACTON PLUS TWO
DAYS (T+2). Tnoro is a vory liquid bond markot witn maturitios availablo o up to 25yrs givon tno govornmont's nood to und a
porsistont budgot doioit. ntorost Pato Swaps aro availablo onsnoro and aro tradod up to 10 yoars but witn mixod liquidity.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
ndian Pupoo
3 dooimal points
USD / NP
0400 1000 GMT
8 pips (45.4200 45.4208)
0.001 NP
U.S. $750m
SPOT
GFT, Foroign Curronoios Guido, ndia p. 1 / 1

lcrci_r Currcrcic CuiHc. Kcrcn

Tno won, KPW, is in a roo loat rogimo. Looal and osnoro markots aro troatod soparatoly. Dooumontation is roquirod but on or
dolivory at maturity osnoro and or orward FX oontraots. NDF's aro tradod as aro FX options. Tnoro aro no trading rostriotions.
ntorost Pato Swaps aro availablo and aro tradod up to 10yoars witn intorost rato options also availablo.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Koroan Won
2 dooimal points
USD / KPW
0130 0830 GMT
0.15 (1182.50 1182.65)
0.01 KPW
U.S. $2bn
SPOT
GFT, Foroign Curronoios Guido, Koroa p. 1 / 1

lcrci_r Currcrcic CuiHc. Mcxicc

Tno poso nas loatod sinoo Dooombor 1994 ator tno oxonango rato band rogimo was abandonod. Botn FX and looal dobt
markots aro vory liquid. Tno govornmont issuos bills witn tonors ranging rom ono montn up to ono yoar on a wookly basis,
aooording to a proannounood sonodulo. Sinoo last yoar, tno govornmont is also issuing longordatod poso soouritios witn up
to 5 yoar maturity, but tno snort ond is most liquid. Tno govornmont nas issuod poso donominatod soouritios only sinoo 1995
and inlation linkod bonds sinoo 1996. Tno oxtonsion in tno yiold ourvo tnat rosultod rom tno oonsolidation o a moro stablo
maoroooonomio ramowork in rooont yoars nas allowod sovoral Moxioan irms to issuo posodonominatod soouritios witn
modium torm tonors in tno domostio markot. ntorost rato swaps aro liquid up to 5 yoars and aro tradod up to 10 yoars.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Moxioan Poso
4 dooimal points
USD / MXN & EUP / MXN
0830 1930 GMT
120 pips USD / MXN (10.8350 10.8470)
150 pips EUP / MXN (13.9000 13.9150)
.0001 MXN
U.S. $7bn
Settlement Casn, Tom, Spot
SPOT
GFT, Foroign Curronoios Guido, Moxioo p. 1 / 1

lcrci_r Currcrcic CuiHc. lclnrH

Tno zloty, PLN, nas boon roo loating sinoo April 2000. t is oonvortiblo or ourront aooount transaotions. Most monoy markot
transaotions aro dono tnrougn orox swaps or osnoro invostors. Domostio soourity oxposuros oan bo nodgod in tno domostio
orward markot by osnoro invostors. An osnoro intorost rato swap markot nas boon dovoloping ast, witn up to tno 5 yoar
boing tno most liquid part o tno PS ourvo.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Polisn Zloty
4 dooimal points
USD / PLN & EUP / PLN
0900 1700 GMT
80 pips USD / PLN (3.6550 3.6630)
80 pips EUP / PLN (4.6910 4.6990)
.0001 PLN
U.S. $1bn
SPOT
GFT, Foroign Curronoios Guido, Poland p. 1 / 1

lcrci_r Currcrcic CuiHc. ~ir_njcrc

Tno Singaporo dollar, SGD, is undor a managod loat rogimo guidod by tno ourronoy's trado woigntod indox. Tno Monotary
Autnority o Singaporo's long torm polioy is to manago a trado woigntod approoiation o tno ourronoy to dampon importod
inlation and to balanoo aggrogato domand. Tno looal and osnoro markots aro not distinguisnod and tnoro aro no
looal/osnoro rostriotions. Tnoro is a liquid spot markot and a limitod orward FX markot. NDF's aro not availablo but FX options
aro. Tnoro aro no trading rostriotions, dooumontation is tnorooro not roquirod. Witn tno promotion o tno oontral bank, tno
govornmont and tno oorporato bond markots navo grown in rooont yoars. PS's aro tradod on-snoro rom 1 to 10 yoars witn
liquidity good up to 5 yoars but poor boyond tnoro.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Singaporo Dollar
4 dooimal points
USD / SGD
0100 0800 GMT
7 pips (1.6930 1.6937)
.0001 SGD
U.S. $1bn
SPOT
GFT, Foroign Curronoios Guido, Singaporo p. 1 / 1

lcrci_r Currcrcic CuiHc. ~cull lricn

Tno Soutn Arioan domostio markot is ono o tno moro sopnistioatod in torms o produots and liquidity in oomparison to tno otnor
markots. Foroign oxonango and monoy markots aro liquid, witn aotivo partioipation botn rom onsnoro and osnoro invostors.
Tno ixodinoomo markot is also woll dovolopod, witn a torm struoturo o up to 30 yoars. Tno ntorost rato swap markot is also
dovoloping ast and boooming liquid. Tnoro aro rostriotions or osnoro invostors but tnoso aro raroly onorood.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Soutn Arioan Pand
4 dooimal points
USD / ZAP
0900 1700 GMT
300 pips (6.7400 6.7700)
.0001 ZAP
U.S. $1bn
SPOT
GFT, Foroign Curronoios Guido, Soutn Arioa p. 1 / 1

lcrci_r Currcrcic CuiHc. 1lnilnrH

Following tno Asian inanoial orisis tno autnoritios introduood now rostriotions on THB lows. Tnoso tigntor oontrols navo
roduood THB volatility and nolpod tno Bank o Tnailand maintain intorost ratos at lowor lovols. THB is a rooly loating ourronoy
witn sogrogatod domostio and osnoro markots. Oioial dooumontation is roquirod to trado THB botn in spot and orward
markot. NDF's aro not availablo but options aro. Tno BOT nas rooontly inoroasod tno lovol o dooumontation roquirod by non
rosidonts. Tno govornmont bond markot nas grown rapidly sinoo 1997, to nolp sot tno bononmark or oorporato bond issuanoo.
ssuanoo roso snarply as tno govornmont raisod unds to inanoo tno inanoial sootor bailout in 1998. Tno oorporato bond
markot nas also lourisnod as oompanios turn to tno bond markot or unding (duo to low intorost rato and banks' roluotanoo to
lond). PSs aro availablo osnoro and onsnoro rom 110 yoars witn liquidity poor boyond 5 yoars.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Tnai Bant
2 dooimal points
USD / THB
0100 0900 GMT
5 pips (39.00 39.05)
.01 THB
U.S. $700 900m
SPOT
GFT, Foroign Curronoios Guido, Tnailand p. 1 / 1

lcrci_r Currcrcic CuiHc. 1urlc,

Sinoo Fobruary 2001 tno Turkisn Lira, TPL, nas boon a ully oonvortiblo ourronoy, naving boon a managod baskot up until tnon.
Tnoro aro no rostriotions on osnoro invostmont. Botn orox and ixodinoomo markots aro liquid, and osnoro invostors aro
airly aotivo in all markots. Tno longost maturity in TPL is 18 montns. Tno most liquid part o tno ourvo is up to 1 yoar. Tnoro is a
liquid and aotivo ropo markot witn O/N1w maturitios.

11 1!7 T!!R
www.qT1T1eX.r
616.974.3682 ax
CONTACT :
Currency
Most liquid cross
Best Liquidity
1 pip
Turkisn Lira
0 dooimal points
USD / TPL
0830 1700 GMT
10000 pips (1,350,500 1,360,000)
1 TPL
U.S. $500m
SPOT
GFT, Foroign Curronoios Guido, Turkoy p. 1 / 1

000 Guide To Currency Trading - Forex

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FX 2. n addition, GFT introduood DoalBook

FX Mobilo, a ulloaturod orox trading applioation or

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