The Investors’ & Exporters’ FX Window (I&E FX Window) is a unique trading segment that the Central Bank of Nigeria (CBN) developed to improve liquidity and expedite the prompt execution and settlement of qualified foreign exchange (FX) transactions.

The purpose of this window is to meet investors’, exporters’, and end users’ FX requirements while expanding the FX market. The main objective of the Investors’ & Exporters’ FX Window is to improve liquidity in the foreign exchange market of Nigeria.

• By providing a dedicated platform for investors, exporters, and end-users, the CBN aims to accommodate all FX obligations and ensure efficient price discovery based on prevailing market conditions.

Eligible Transactions

The I&E Window allows for various types of transactions, including:

1. Invisible Transactions: This category covers a wide range of transactions such as loan repayments, dividends/income remittances, capital repatriation, consultancy fees, technology transfer agreements, personal home remittances, and other eligible invisible transactions outlined in the CB Foreign Exchange Manual.
2. Bills for Collection: Transactions related to bills for collection, which involve the collection of payments on behalf of customers, are also eligible to access the I&E Window.
3. Trade-related Payment Obligations: Any other payment obligations arising from trade activities can be processed through the I&E Window at the customer’s discretion.

It’s important to note that for the above permitted invisible transactions and bills for collection, only US dollars sourced from the CBN FX Window (limited to Secondary Market Intervention Sales – SMIS) Wholesale (Spot and Forwards) are eligible for purchase.

Additionally, any other trade-related payment obligations can be executed through the I&E FX Window at the customer’s request.

Participants

The supply of foreign currency to the I&E FX Window is sourced from portfolio investors, exporters, Authorized Dealers (such as banks), and other parties with foreign currency holdings to exchange for Naira.

The CBN also actively participates in this window as a major provider of liquidity and ensures professional market conduct.

The supply of foreign currency to the I&E Window comes from different entities, including:

1. Portfolio Investors: Investors engaged in the Nigerian market who possess foreign currency that they want to exchange for the Naira.
2. Exporters: Businesses involved in export activities that have foreign currency earnings and wish to convert them into local currency.
3. Authorized Dealers: These are CBN-licensed entities, such as banks, that act as intermediaries in FX transactions. They facilitate the buying and selling of foreign currency for their customers.
4. CBN: The Central Bank of Nigeria participates in the I&E Window as a market participant to promote liquidity and ensure professional market conduct.

Price Discovery Mechanism

To facilitate price discovery until the market fully transitions to FX Trading Systems, participants at the I&E Window currently trade via telephone.

• The CBN encourages corporates to onboard the FMDQ Thomson Reuters FX Trading & Auction Systems to enhance market transparency.
• FMDQ, as the designated platform, polls buying and selling rates from major participants and provides indicative market depth information, contributing to the price discovery process.

Role of FMDQ

FMDQ Securities Exchange (FMDQ) plays a crucial role in the I&E Window by providing market information and transparency.

• FMDQ publishes information on its corporate website and data subscription portal daily.
• It includes details about the activities in the I&E FX Window, such as the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate, which serves as the reference rate for spot FX operations in various recognized FX trading segments.

The I&E FX Window plays a crucial role in enhancing liquidity, transparency, and price discovery in the Nigerian FX market. It allows for efficient trading of various eligible transactions, while the participation of different entities ensures a competitive marketplace.

Market participants can rely on the I&E FX Window and the supporting infrastructure provided by organizations like FMDQ to engage in FX trading with confidence and efficiency.

Difference between NAFEX and I&E Window

Most people confuse the NAFEX and I&E Window exchange rates. However, there is a big difference in the two rates and how they are applied.

The difference between NAFEX rates and I&E Window rates lies in their specific applications and the segments of the foreign exchange market they represent. Here’s a breakdown of the key distinctions:

• NAFEX Rates: NAFEX rates refer to the Nigerian Autonomous Foreign Exchange Fixing. It is a reference rate used for spot foreign exchange operations in recognized FX trading segments, including the I&E Window, interbank market, and other approved trading segments.
• I&E Window Rates: I&E Window rates are the exchange rates at which foreign currency trades are executed within the Investors’ & Exporters’ FX Window. These rates are determined based on prevailing market circumstances and serve as benchmarks for transactions conducted in the I&E Window.

To understand how the I&E Window works, let’s look at some key terms:

• Investors and Exporters (I&E) Window: It’s like a marketplace where people, like investors, exporters, and authorized dealers (such as banks), can trade different currencies. The exchange rate in this window is determined by market forces and is called the NAFEX Rate (set by FMDQ).
• Nigerian Autonomous Foreign Exchange Fixing (NAFEX): It’s a reference rate that tells us the right amount of money needed for transactions in the I&E Window.
• Financial Markets Dealers Quotations (FMDQ) Securities Exchange PLC: FMDQ is an institution that helps in the trading of different financial securities, including foreign exchange, bonds, and other financial products. It promotes transparency, efficiency, and liquidity in the Nigerian financial market.

So, in simple terms, the CBN is now allowing the exchange rate to be determined by the forces of demand and supply in the I&E Window. The NAFEX Rate, set by FMDQ, guides the transactions. The aim is to ensure fair and transparent exchanges while regulating the key players in the market.

I&E Window/NAFEX rates are the exchange rates at which foreign currency trades are executed within the I&E Window/NAFEX. These rates are determined based on prevailing market circumstances and serve as benchmarks for transactions conducted in the I&E Window/NAFEX. The CBN publishes the weighted average rate of the I&E Window/NAFEX on its website.

What are the benefits of the I&E Window/NAFEX?

The I&E Window/NAFEX offers several benefits for the Nigerian economy and the FX market, such as:

• Improving FX liquidity and availability for investors, exporters, and end-users.
• Enhancing transparency and efficiency in FX price discovery and allocation.
• Reducing the gap between the official and parallel market rates.
• Boosting investor confidence and inflows into the Nigerian market.
• Supporting the diversification of the Nigerian economy and export promotion.

What are the challenges of the I&E Window/NAFEX?

The I&E Window/NAFEX also faces some challenges and limitations, such as:

• The volatility and uncertainty of the FX market due to external and internal factors.
• The dependence on oil revenues and foreign portfolio inflows as the main sources of FX supply.
• The regulatory and operational constraints of the CBN and the Authorized Dealers in managing the FX demand and supply.
• The lack of adequate data and information on the FX transactions and activities in the I&E Window/NAFEX.

Can I Buy a Currency Forward?

In the foreign exchange market, a currency forward is a legally binding agreement that fixes the exchange rate for the purchase or selling of a currency at a later time. In essence, a currency forward is an adjustable hedging instrument that doesn’t require an initial margin payment.

The other main advantage of a currency forward is that, in contrast to exchange-traded currency futures, its conditions are flexible and can be customized to a specific amount, for any maturity or delivery date.

Unlike other hedging mechanisms such as currency futures and options contracts—which require an upfront payment for margin requirements and premium payments, respectively—currency forwards typically do not require an upfront payment when used by large corporations and banks.

However, a currency forward has little flexibility and represents a binding obligation, which means that the contract buyer or seller cannot walk away if the “locked-in” rate eventually proves to be adverse. Therefore, to compensate for the risk of non-delivery or non-settlement, financial institutions that deal in currency forwards may require a deposit from retail investors or smaller firms with whom they do not have a business relationship.

Currency forward settlement can either be on a cash or a delivery basis, provided that the option is mutually acceptable and has been specified beforehand in the contract. Currency forwards are over-the-counter (OTC) instruments, as they do not trade on a centralized exchange, and are also known as “outright forwards.”

Understanding Currency Forward Contracts

Currency forward contracts are primarily utilized to hedge against currency exchange rate risk. It protects the buyer or seller against unfavorable currency exchange rate occurrences that may arise between when a sale is contracted and when the sale is actually made. However, parties that enter into a currency forward contract forego the potential benefit of exchange rate changes that may occur in their favor between contracting and closing a transaction.

Read Also: Factors That Influence Exchange Rate

While currency forward contracts are a type of futures contract, they differ from standard futures contracts in that they are privately made between the two parties involved, customized to the parties’ demands for a specific transaction, and are not traded on any exchange. Since currency forwards are not exchange-traded instruments, they do not require any kind of margin deposit.

Because currency forward contracts are private agreements between the parties involved, they can be tailored to precisely fit the parties’ respective needs regarding a monetary amount, the agreed-upon exchange rate, and the time frame that the contract covers. The currency exchange rate specified in a currency forward contract is usually determined in relation to prevailing interest rates in the home countries of the two currencies involved in a transaction.

When Currency Forward Contracts are Used

Currency forward contracts are typically used in situations where currency exchange rates can affect the price of goods sold.

A common example is when an importer is buying goods from a foreign exporter, and the two countries involved have different currencies. They may also be used when an individual or company plans to purchase property in a foreign country or for making maintenance payments related to such property once it has been purchased.

Currency forward contracts may also be made between an individual and a financial institution for purposes such as paying for a future foreign vacation or funding education to be pursued in a foreign country.

Practical Example

Currency forward contracts are most frequently used in relation to a sale of goods between a buyer in one country and a seller in another country. The contract fixes the amount of money that will be paid by the buyer and received by the seller. Thus, both parties can proceed with a firm knowledge of the cost/price of the transaction.

When a transaction that may be affected by fluctuations in currency exchange rates is to take place at a future date, fixing the exchange rate enables both parties to budget and plan their other business actions without worrying that the future transaction will leave them in a different financial condition than they had expected.

For example, assume that Company A in the United States wants to contract for a future purchase of machine parts from Company B, which is located in France. Therefore, changes in the exchange rate between the US dollar and the euro may affect the actual price of the purchase – either up or down.

The exporter in France and the importer in the US agree upon an exchange rate of 1.30 US dollars for 1 euro that will govern the transaction that is to take place six months from the date the currency forward contract is made between them. At the time of the agreement, the current exchange rate is 1.28 US dollars per 1 euro.

If, in the interim and by the time of the actual transaction date, the market exchange rate is 1.33 US dollars per 1 euro, then the buyer will have benefited by locking in the rate of 1.3. On the other hand, if the prevailing currency exchange rate at that time is 1.22 US dollars for 1 euro, then the seller will benefit from the currency forward contract. However, both parties have benefited from locking down the purchase price so that the seller knows his cost in his own currency, and the buyer knows exactly how much they will receive in their currency.

The mechanism for computing a currency forward rate is straightforward and depends on interest rate differentials for the currency pair (assuming both currencies are freely traded on the forex market).

For example, assume a current spot rate for the Canadian dollar of US$1 = C$1.0500, a one-year interest rate for Canadian dollars of 3 percent, and the one-year interest rate for US dollars of 1.5 percent.

After one year, based on interest rate parity, US$1 plus interest at 1.5 percent would be equivalent to C$1.0500 plus interest at 3 percent, meaning:

• $1 (1 + 0.015) = C$1.0500 x (1 + 0.03)
• US$1.015 = C$1.0815, or US$1 = C$1.0655

The one-year forward rate in this instance is thus US$ = C$1.0655. Note that because the Canadian dollar has a higher interest rate than the US dollar, it trades at a forward discount to the greenback. As well, the actual spot rate of the Canadian dollar one year from now has no correlation on the one-year forward rate at present.

The currency forward rate is merely based on interest rate differentials and does not incorporate investors’ expectations of where the actual exchange rate may be in the future.

Currency Forwards and Hedging

How does a currency forward work as a hedging mechanism? Assume a Canadian export company is selling US$1 million worth of goods to a U.S. company and expects to receive the export proceeds a year from now. The exporter is concerned that the Canadian dollar may have strengthened from its current rate (of 1.0500) a year from now, which means that it would receive fewer Canadian dollars per US dollar. The Canadian exporter, therefore, enters into a forward contract to sell $1 million a year from now at the forward rate of US$1 = C$1.0655.

If a year from now, the spot rate is US$1 = C$1.0300—which means that the C$ has appreciated as the exporter had anticipated – by locking in the forward rate, the exporter has benefited to the tune of C$35,500 (by selling the US$1 million at C$1.0655, rather than at the spot rate of C$1.0300). On the other hand, if the spot rate a year from now is C$1.0800 (i.e. the Canadian dollar weakened contrary to the exporter’s expectations), the exporter has a notional loss of C$14,500.

What is the Cheapest Way to Buy Currency?

Are you debating about the best way to get foreign currency? Are you looking for some tips on how to get your foreign currency cheap and easy before you head on your way?

1. Get cash at the Bank

One of the most essential ways of ensuring that you do not get scammed out of a bunch of money when you exchange currency is to go directly to your bank or credit union. To do this, you have to go before you leave the country unless your bank has outlets in the country that you are visiting, though even still it is not worth the risk.

If, for example, you are visiting somewhere from the US, you will be pleased to know that most big US banks have foreign currency available to sell without additional charges beyond the current exchange rate.

To do this you can either go to an outlet of your bank or you can order the currency online through a currency exchange to be delivered to your home. Some banks in certain locations might even be able to offer a same-day exchange, meaning you can instantly exchange foreign currency.

2. Avoid currency exchange kiosks

You can be sure to find a whole bunch of these kinds of kiosks at airports, no doubt exploiting those travelers who either forgot to exchange currency, didn’t have time, or otherwise, worried that they didn’t exchange enough elsewhere.

For all the convenience that such kiosks offer, the exchange rates that they offer are far less favorable than those that would be offered by your bank or credit union. This occurs because the kiosk does not offer competitive exchange rates, adding foreign transaction fees because they know that you are likely not in a position to exchange currency elsewhere.

When exchanging currency in this way, make sure you have a decent currency conversion calculator so you can exchange money properly. Banks and credit unions are likely going to offer you the best rates without a foreign transaction fee.

3. Pay with your card

Something to be incredibly wary of in the modern day is the presence of these kinds of foreign transaction fees when paying with a credit or debit card.

Depending on the currency exchange rate and which bank you are with, your card might carry a foreign transaction fee – up to 3% on every purchase in other countries, for example. To avoid these kinds of covert extra fees, you will need to have read the fine print on your bank’s website before you travel. Alternatively, you can just ask them directly via phone or a quick Google search.

If you have enough time before you travel, why not apply for a credit card that doesn’t charge these kinds of extra fees, particularly those with good travel rewards? If not, you can always try to find the best place to exchange foreign currencies on your own.

4. Pay in the local currency

There are plenty of international merchants who are cheeky enough to have cottoned onto letting their clients choose whether they want to pay for their purchase in local currency or home currency. Sure, this kind of thing doesn’t happen with every purchase, but it is best to be vigilant as it is a great way to avoid fees.

In such situations, always choose to pay in the local currency. Choosing to pay in your own currency is likely to incur an extra currency conversion fee which, in turn, might mean that you get a poor exchange rate.

These merchants are very cheeky and may make it seem like it is a convenient choice to pay in your own currency, but this will ultimately cost you more in the long run.

5. Know your ATM fees and Limits

Even if you are able to source good currency conversion fees using a foreign ATM, maybe it would be best to hold off on using one until you have found out for sure what kind of fees your bank charges and what kind of limits it imposes on daily withdrawals when you are abroad. This is one of the key tips for business travel.

The best way to check is to contact your bank directly and ask about the daily withdrawal limits on your account. If it is low, then try asking your bank to raise the limit so that you can withdraw more while you are traveling. Equally important is to ask them about any fees that might be incurred when using an out-of-network ATM while traveling abroad.

Some international ATMs might even limit you to a lower amount of cash withdrawals than your own bank allows. The same goes for the amount you withdraw from the machine. In such instances, you will wish you had planned ahead and ensured that you had enough cash for the trip.

How do you Invest in Currency?

The world’s currencies are exchanged on the foreign exchange market, or forex, around the clock. Some people only see it as a way to convert one currency into another. These marketplaces are essential for international businesses that trade currencies between different countries. Traders who place bets on the changes of currencies in relation to one another also occupy the market.

The foreign exchange market functions amongst brokers’ clientele, brokers and banks, and banks themselves. A retail investor can engage in this market in the following five ways.

1. Standard Forex Trading Account

Investors can open an account with a forex broker and trade currencies from around the world. There are several differences in how this market operates when compared to the U.S. stock exchanges:

1. Currencies are traded in pairs and an investor is betting one will go up, long, and the other will go down, short.
2. There are no regulated currency exchanges and no central clearinghouse for trade.
3. There is no uptick rule for taking short positions.
4. There is no upper limit in the size of a position.
5. Currency dealers generally make money on the bid-ask spread, rather than earning commissions.

2. CDs and Savings Accounts

EverBank (formerly TIAA Bank) offers a WorldCurrency certificate of deposit (CD) that earns interest at local rates in specific countries. It also offers a basket CD that includes a mix of various currencies and a foreign currency account that functions like a money market account and allows the transfer of money between major currencies.

The CDs are subject to exchange rate fluctuations but feature a higher interest rate than dollar-denominated CDs. When the CD matures, investors get back fewer dollars than they invested if the dollar strengthened against the foreign currency. FDIC insurance protects against bank insolvency but not currency risk.

3. Foreign Bond Funds

There are mutual funds that invest in foreign government bonds. These mutual funds earn interest denominated in foreign currency. If the foreign currency goes up in value relative to local currency, the earned interest increases when converted back to local currency.

Investing in foreign bonds allows investors to select their preferred level of risk and pursue additional yield. Examples of such funds include the Merk Hard Currency Fund, Aberdeen Global Income Fund, and Templeton Global Bond Fund.

4. Multinational Corporations

Many stockholders indirectly participate in the foreign currency markets through their ownership in companies that do significant business in foreign countries. Some of the better-known American companies with overseas exposure are Coca-Cola, McDonald’s, IBM, and Walmart.

The revenues and profits derived from overseas operations are boosted if the foreign currency appreciates versus the dollar. This is because those revenues are converted back into dollars for financial reporting purposes, and a stronger foreign currency will yield more dollars in exchange.

5. ETFs and ETNs

Exchange-traded funds (ETFs) and exchange-traded notes (ETNs) are traded like stocks and can be a way to invest in currencies without needing to trade the forex. With a standard investing account with most brokerages, investors can buy access to currency ETFs such as UUP, the Invesco DB US Dollar Index Bullish Fund, or EUO, the ProShares UltraShort Euro.

ETNs are similar to corporate bonds, but they tend to have a similar exposure to the currency market as ETFs. On the same exchange, investors trade ETFs, they can also find common currency ETNs such as the iPath® GBP/USD Exchange Rate ETN (GBB).

Opportunities and Risks of Forex Trading

Opportunities

• Forex trading is very popular, so markets typically have high liquidity with low transaction fees.
• Investors diversify their portfolios by gaining assets outside of their normal trading location.
• Traders can enter highly leveraged trades, potentially multiplying profit.
• Forex markets run all day long, and investors can trade whenever they want.
• No central exchange or regulator controls the market.

Risks

• Traders don’t have much transparency due to the deregulated nature of the market.
• Forex rates are influenced by many factors; the process of determining the price of a currency is complex.
• Traders can enter highly leveraged trades, potentially multiplying losses.
• Forex markets have historically been highly volatile.
• Unlike with stocks, forex trades often don’t have access to portfolio advisors.

The forex market provides easy access for beginners. Since different international markets have staggered hours, it’s possible to trade Forex around the clock. There are typically low transaction fees because it’s a market with high liquidity.

Exchange-rate risk, or currency risk, occurs when the price of one currency changes relative to another’s. Transaction risk is the change losses that occur due to delays between the transaction and settlement of trades. Other risks such as political risk are specific to the underlying currencies losing value due to economic or government events.

Currencies are impacted by world events around the clock, and the Internet and wireless communications provide almost instant access to even small investors. Currencies provide some measure of diversification for people who invest primarily in U.S. securities. Alternatively, traders can take advantage of changes in relative currency strength by investing in global currencies.

Which is the Strongest Currency to Invest in?

There are many other currencies that are stronger than the US dollar, even though it is the most traded currency in the world, accepted in many nations, and acts as an unofficial global reserve currency. Let’s investigate the currencies in question and the elements that influence their value.

1. Kuwaiti dinar (KWD)

The Kuwaiti dinar (KWD) has been the official currency of Kuwait since 1961 when it replaced the Gulf rupee. The Kuwaiti dinar is one of the highest-valued currencies in the world and its symbol is “KD” or “د.ك,” in Arabic.

The exchange rate of the Kuwaiti dinar is high compared to most other currencies. Unlike other Gulf Cooperation Council (GCC) countries, the currency is not pegged to the US dollar alone, but an undisclosed basket of international currencies. While the exact weighting of the US dollar is not known, it is assumed that it is high due to Kuwait´s dependence on oil (which is priced in USD). The value of the Kuwaiti dinar fluctuates only slightly.

The Kuwaiti dinar is a stable currency and is accepted in international transactions. However, the currency is primarily used in Kuwait, and banknotes are rarely circulated outside of the country.

The Kuwaiti dinar is divided into 1,000 fils and is available in banknotes with denominations of 1/4, 1/2, 1, 5, 10, and 20 dinars. Each banknote features various images, including landmarks, historical figures, and cultural symbols significant to Kuwait.

2. Bahraini dinar (BHD)

The Bahraini dinar (BHD) is the official currency of the Kingdom of Bahrain, an island nation located in the Middle East. It has been the currency of Bahrain since 1965, replacing the Gulf Rupee. The Bahraini dinar is known for its high value and stability. The symbol for the Bahraini dinar is “BD” or “د.ب,” in Arabic.

The Bahraini dinar is pegged against the US dollar at a rate of 2.659 USD. The value of the BHD, therefore, fluctuates very rarely. Bahrain has no currency controls in place, which allows the free movement of capital. While the BHD is accepted internationally, it is primarily used within Bahrain.

The Bahraini dinar is divided into 1,000 fils. However, prices are typically quoted in dinars. The Bahraini dinar is available in banknotes with denominations of 1/2, 1, 5, 10, and 20 dinars. Coins are also in circulation with denominations of 5, 10, 25, 50, and 100 fils. The banknotes and coins feature images of important Bahraini landmarks, historical figures, and cultural symbols.

3. Omani rial (OMR)

The Omani rial (OMR) is the official currency of the Sultanate of Oman, a country located in the Middle East. It replaced the Indian rupee – Oman´s previous currency – in 1970. Omani rial is known for its high value and stability. The symbol for the Omani rial is OMR or “ر.ع.” in Arabic.

The Omani rial is pegged to the US dollar at an exchange rate of 2.597 USD and fluctuates minimally. Oman has liberal currency controls compared to the rest of the region.

The Omani rial is divided into 1,000 baisa, although prices are usually quoted in rials. The Omani rial is available in banknotes with denominations of 1, 5, 10, 20, and 50 rials. Coins are issued in denominations of 5, 10, 25, and 50 baisa. The banknotes and coins feature images of significant Omani landmarks.

4. Jordanian dinar (JOD)

The Jordanian dinar (JOD) is the official currency of the Hashemite Kingdom of Jordan, a country located in the Middle East. Its symbol is “JD”. The dinar is divided into 100 smaller units known as “piasters” or “qirsh,” represented by the symbol “قرش” in Arabic.

The Jordanian currency was introduced in 1950, just four years after the Hashemite Kingdom of Jordan was established.

Unlike other Middle Eastern countries that pegged their currencies to the US dollar, Jordan is not a major oil-producing country. It maintains the peg to keep the economy stable, inflation under control and to make international trade smoother. Jordan´s central bank is maintaining a fixed exchange rate of 1 JOD = 1.41 USD.

Jordanian banknotes are issued in denominations of 1, 5, 10, 20, and 50 dinars. Coins are issued as 1 dinar, 1/2 dinar, 1/4 dinar, and smaller denominations in piasters (5, 10, 25, and 50 piasters).

5. British pound (GBP)

The British pound, also known as the pound sterling (GBP), is the official currency of the United Kingdom and its crown dependencies and overseas territories. It is one of the oldest currencies in the world and plays a significant role in the global economy. The symbol for the British pound is “£”.

Along with the euro and the US dollar, the British pound is considered to be one of the world´s main reserve currencies. The pound played a significant role in global trade and finance during the times of the British Empire. Today, its importance in global trade is waning, but it maintains its status as a major currency due to the UK being one of the world´s largest economies and a major financial center.

The exchange rate of the British pound fluctuates against other major currencies. It is influenced by various factors, including interest rates, inflation, economic indicators, and geopolitical events.

The central bank of the United Kingdom is the Bank of England. Founded in 1694, the BoE is responsible for issuing and regulating the British pound. It also conducts monetary policy to keep inflation under check and maintain financial stability in the UK.

The British pound has experienced periods of major volatility in the past. Most recently, the pound crashed close to 1.03 against the USD in September 2022 after the Truss government unveiled plans to boost borrowing while slashing taxes. Prior to that, the pound saw a period of prolonged volatility ahead and during the Brexit process. In 1992, the UK government was forced to withdraw the pound from the European Exchange Rate Mechanism (ERM). The day it happened is commonly referred to as “Black Wednesday” because of the significant impact it had on the currency and the UK’s financial system.

The British pound is divided into 100 smaller units called “pence”. The Bank of England issues banknotes in different denominations, such as £5, £10, £20, and £50. Coins are available as 1p, 2p, 5p, 10p, 20p, 50p, £1, and £2.

6. Gibraltar pound (GIP)

The Gibraltar pound (GIP) is the official currency of Gibraltar, a British Overseas Territory located in southern Europe. While Gibraltar is part of the United Kingdom, it is not part of the UK’s currency union, and it issues its own banknotes and coins. The currency is pegged to the British pound (GBP) at a 1:1 exchange rate, meaning that one Gibraltar pound is equivalent in value to one British pound. The currency symbol for the Gibraltar pound is “£,” which is the same as the symbol for the British pound.

The Gibraltar pound is legal tender within Gibraltar, and both Gibraltar pounds and British pounds are widely accepted for transactions on the territory. However, the Gibraltar pound cannot be used in the United Kingdom and can rarely be exchanged in foreign countries.

The Gibraltar pound is seen as a stable currency due to its peg to the British pound. The peg is beneficial for Gibraltar as it maintains a very close relationship with the United Kingdom.

The Gibraltar pound is divided into 100 smaller units called “pence”. The Government of Gibraltar and the Gibraltar Monetary Authority issue banknotes in denominations of £5, £10, £20, £50, and £100. Coins are issued as 1p, 2p, 5p, 10p, 20p, 50p, £1, and £2. The banknotes have designs unique to Gibraltar, featuring local landmarks and symbols.

7. Cayman Islands dollar (KYD)

The Cayman Islands dollar (KYD) is the official currency of the Cayman Islands, a British Overseas Territory located in the Caribbean. The currency is abbreviated as “CI$” to distinguish it from other dollar-denominated currencies. The Cayman Islands dollar is issued and regulated by the Cayman Islands Monetary Authority.

The Cayman Islands dollar is pegged to the US dollar at a fixed exchange rate of CI$1 = US$1.20. This is beneficial for Cayman Islands´ financial sector, which is famous for its offshore banking and investment services.

It is divided into 100 smaller units called “cents”. The Cayman Islands Monetary Authority issues banknotes in denominations of CI$1, CI$5, CI$10, CI$25, CI$50, and CI$100. Coins are issued as 1 cent, 5 cents, 10 cents, 25 cents, and CI$1.

8. Swiss franc (CHF)

The Swiss franc (CHF) is the official currency of Switzerland and Liechtenstein. It is one of the world’s major reserve currencies and is famous for its stability and status as a safe haven. The symbol for the Swiss franc is “CHF”.

Switzerland decided to abandon the gold standard in 2000. However, the Swiss National Bank (SNB) has frequently intervened in the foreign exchange markets and at times, maintained a soft peg against the euro, ensuring that one euro is not valued below a certain level in Swiss francs.

The Swiss franc is widely accepted in international transactions. Many central banks and government institutions around the world hold Swiss Francs as part of their reserve assets due to its stability.

Switzerland’s status as a popular tourist destination is another factor boosting demand for the Swiss franc.

The Swiss franc is divided into 100 smaller units called “centimes” in French or “rappen” in German. The SNB issues banknotes in various denominations, including 10, 20, 50, 100, 200, and 1,000 Swiss francs. The 1,000 banknote is one of the highest-value banknotes currently circulating. Coins are issued as 5, 10, 20, and 50 centimes, as well as 1, 2, and 5 francs.

9. Euro (EUR)

The euro (EUR) is the official currency of the eurozone, a monetary union consisting of the majority of the European Union (EU) member states. It is one of the world’s major reserve currencies and is the second most widely held reserve currency after the US dollar. The euro was introduced on January 1, 1999, and became the official currency for electronic transactions. Euro banknotes and coins were later introduced on January 1, 2002, replacing the national currencies of the participating countries. The symbol for the euro is “€”.

The euro is a floating currency, and its value is determined by market forces. However, as it is the currency of 19 different countries, its value is influenced by a variety of factors across the entire eurozone.

The eurozone consists of 19 countries, which are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

The euro is divided into 100 smaller units called “cents”. Euro banknotes are issued in denominations of €5, €10, €20, €50, €100, €200, and €500. Euro coins are minted as 1, 2, 5, 10, 20, and 50 cents, as well as €1 and €2. Each denomination has a unique design, incorporating various architectural styles from different periods in European history.

10. United States dollar (USD)

The US dollar (USD) is the official currency of the United States of America and is one of the world’s most widely used reserve currencies. It enjoys the status of being the world´s most-used reserve currency. The symbol for the US dollar is “$”.

The US dollar has a dominant role in international trade and finance. It is held as a reserve currency and is widely used in international transactions. Countries that decide to peg their currency often use the US dollar as the anchor currency. For example, most currencies in the GCC are pegged against the US dollar.

The exchange rate of the US dollar is determined in the foreign exchange market. Factors that determine the value of the US dollar include interest rates, inflation, economic indicators, geopolitical events, and investor sentiment.

The US dollar is divided into 100 smaller units called “cents”. The US dollar banknotes are printed as $1, $5, $10, $20, $50, and $100. US coins come in denominations of 1 cent (penny), 5 cents (nickel), 10 cents (dime), 25 cents (quarter), and 50 cents (half dollar).