forex reserves and foreign trade

Forex - FX
What Does It Mean?
What Does Forex - FX Mean?
The market in which currencies are traded. The forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world.
Investopedia Says
Investopedia explains Forex - FX
There is no central marketplace for currency exchange; trade is conducted over the counter. The forex market is open 24 hours a day, five days a week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.

The forex is the largest market in the world in terms of the total cash value traded, and any person, firm or country may participate in this market...........


Exchange Rate
What Does It Mean?
What Does Exchange Rate Mean?
The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another. For example, the higher the exchange rate for one euro in terms of one yen, the lower the relative value of the yen.
Investopedia Says
Investopedia explains Exchange Rate
In most financial papers, currencies are expressed in terms of U.S. dollars, while the dollar is commonly compared to the Japanese yen, the British pound and the euro. As of the beginning of 2006, the exchange rate of one U.S. dollar for one euro was about 0.84, which means that one dollar can be exchanged for 0.84 euros

Real Effective Exchange Rate - REER
What Does It Mean?
What Does Real Effective Exchange Rate - REER Mean?
The weighted average of a country's currency relative to an index or basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country's currency, with each other country within the index.
Investopedia Says
Investopedia explains Real Effective Exchange Rate - REER
This exchange rate is used to determine an individual country's currency value relative to the other major currencies in the index, as adjusted for the effects of inflation. All currencies within the said index are the major currencies being traded today: U.S. dollar, Japanese yen, euro, etc.

This is also the value that an individual consumer will pay for an imported good at the consumer level. This price will include any tariffs and transactions costs associated with importing the good.
Nominal Effective Exchange Rate - NEER
What Does It Mean?
What Does Nominal Effective Exchange Rate - NEER Mean?
The unadjusted weighted average value of a country's currency relative to all major currencies being traded within an index or pool of currencies. The weights are determined by the importance a home country places on all other currencies traded within the pool, as measured by the balance of trade.
Investopedia Says
Investopedia explains Nominal Effective Exchange Rate - NEER
The NEER represents the relative value of a home country's currency compared to the other major currencies being traded (U.S. dollar, Japanese yen, euro, etc.). A higher NEER coefficient (above 1) means that the home country's currency will usually be worth more than an imported currency, and a lower coefficient (below 1) means that the home currency will usually be worth less than the imported currency. The NEER also represents the approximate relative price a consumer will pay for an imported good.
Balance Of Trade - BOT
What Does It Mean?
What Does Balance Of Trade - BOT Mean?
The difference between a country's imports and its exports. Balance of trade is the largest component of a country's balance of payments. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. A country has a trade deficit if it imports more than it exports; the opposite scenario is a trade surplus.

Also referred to as "trade balance" or "international trade balance"
Investopedia Says
Investopedia explains Balance Of Trade - BOT
The balance of trade is one of the most misunderstood indicators of the U.S. economy. For example, many people believe that a trade deficit is a bad thing. However, whether a trade deficit is bad thing is relative to the business cycle and economy. In a recession, countries like to export more, creating jobs and demand. In a strong expansion, countries like to import more, providing price competition, which limits inflation and, without increasing prices, provides goods beyond the economy's ability to meet supply. Thus, a trade deficit is not a good thing during a recession but may help during an expansion.
Special Drawing Rights - SDR
What Does It Mean?
What Does Special Drawing Rights - SDR Mean?
An international type of monetary reserve currency, created by the International Monetary Fund (IMF) in 1969, which operates as a supplement to the existing reserves of member countries. Created in response to concerns about the limitations of gold and dollars as the sole means of settling international accounts, SDRs are designed to augment international liquidity by supplementing the standard reserve currencies.
Investopedia Says
Investopedia explains Special Drawing Rights - SDR
You can think of SDRs as an artificial currency used by the IMF and defined as a "basket of national currencies". The IMF uses SDRs for internal accounting purposes. SDRs are allocated by the IMF to its member countries and are backed by the full faith and credit of the member countries' governments.
International Monetary Fund - IMF
What Does It Mean?
What Does International Monetary Fund - IMF Mean?
An international organization created for the purpose of:

1. Promoting global monetary and exchange stability.

2. Facilitating the expansion and balanced growth of international trade.

3. Assisting in the establishment of a multilateral system of payments for current transactions.
Investopedia Says
Investopedia explains International Monetary Fund - IMF
The IMF plays three major roles in the global monetary system. The Fund surveys and monitors economic and financial developments, lends funds to countries with balance-of-payment difficulties, and provides technical assistance and training for countries requesting it.
World Trade Organization - WTO
What Does It Mean?
What Does World Trade Organization - WTO Mean?
An international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably, and freely as possible.
Investopedia Says
Investopedia explains World Trade Organization - WTO
Some, especially multinational corporations, believe that the WTO is great for business. Others believe the WTO will undermine the principles of democracy and simply make the rich much richer.
Organization for Economic Cooperation and Development - OECD
What Does It Mean?
What Does Organization for Economic Cooperation and Development - OECD Mean?
The OECD is a group of 30 member countries who discuss and develop economic and social policy.
Investopedia Says
Investopedia explains Organization for Economic Cooperation and Development - OECD
The OECD has been called a think tank, monitoring agency, rich man's club, and unacademic university. Whatever you want to call it, the OECD has a lot of power, as the member nations account for two thirds of the worlds goods and services.