ForexTerminology

  • Letter of Credit / Stand-by Letter of Credit

    This is used in cases where there is no trust between exporter and importer. Therefore, the exporter requires the importer to provide a contingent bank guarantee prior to shipping the goods (in order to ensure payment for these goods). The bank guarantee consists of dozens of conditions which, if fulfilled by the importer, the bank would guarantee the payment. This is the most costly option for foreign trade.

  • LIBOR interest rate

    Acronym for London InterBank Offered Rate. LIBOR interest is the inter-bank interest on loans. This is the interest rate at which banks provide to each other loans in foreign currencies for different terms. This interest is set daily, based on a calculation made by the British Bankers' Association, which reviews interest rates for 21 leading banks in London. The LIBOR Interest rate is published daily at 11:00 am (London time).

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