Demurrage

DEFINITION of 'Demurrage'

A term used in currency trading to denote the cost of currency ownership and/or storage. It is essentially considered to be the cost of carrying money, and is in some respects considered superior to interest payments, as it stimulates currency circulation and economic growth.

BREAKING DOWN 'Demurrage'

In a physical sense, demurrage represents a delay that occurs during the transportation of goods via truck. When this happens, the trucking firm delivering the product can opt to pay a flat fee to the receiver to cover any loss incurred as a result of the delay. This fee can be assessed on an hourly basis. Or in the case of gold, demurrage is simply the costs associated with storage of buillon.

RELATED TERMS
  1. Currency In Circulation

    Currency that is physically used to conduct transactions between ...
  2. Currency

    Currency is a generally accepted form of money, including coins ...
  3. Cost Of Carry

    Costs incurred as a result of an investment position. These costs ...
  4. Funding Currency

    The currency being exchanged in a currency carry trade. A funding ...
  5. Applied Cost

    A term used in cost accounting to denote the cost assigned to ...
  6. Carrying Charge

    Cost associated with storing a physical commodity or holding ...
Related Articles
  1. Entrepreneurship & Small Business

    The Economics of Running a Food Truck

    Thinking of getting into the food truck business? It's not as easy as it looks. Here are some of the various challenges you'll face.
  2. Trading

    Currency Carry Trades 101

    This strategy can provide returns even if the currency pair doesn't move a cent.
  3. Investing

    How To Start a Successful Food Truck

    Understand how a food truck operates and what makes a food truck successful. Learn about the top five steps to run a successful food truck.
  4. Investing

    What are Acquisition Costs?

    A company can recognize acquisition costs as those costs used to buy property and equipment.
  5. Trading

    Drastic Currency Changes: What's The Cause?

    Currency fluctuations often defy logic. Learn the trends and factors that result in these movements.
  6. Markets

    What Happens in a Currency Crisis?

    A currency crisis comes from a decline in the value of a country’s currency.
  7. Markets

    How Currency Works

    Currency offers key advantages over economies based on direct trade. It provides sellers with a broader market for their goods and services, and provides a durable asset with which people can ...
  8. Investing

    Explaining Replacement Cost

    The replacement cost is the cost you’d have to pay to replace an asset with a similar asset at the present time and value.
  9. Trading

    The Effects Of Currency Fluctuations On The Economy

    Currency fluctuations are a natural outcome of the floating exchange rate system that is the norm for most major economies. The exchange rate of one currency versus the other is influenced by ...
  10. Trading

    Forex Tutorial: Reading a Forex Quote and Understanding the Jargon

    One of the biggest sources of confusion for those new to the currency market is the standard for quoting currencies. In this section, we'll go over currency quotations and how they work in currency ...
RELATED FAQS
  1. Is there a world currency? If so, what is it?

    There is no such thing as a world currency. However, since World War II, the dominant or reserve currency of the world has ... Read Answer >>
  2. How much inventory space is available in the United States to store oil?

    Find out how much available storage space there is for crude oil in the United States and why continuing rising supply levels ... Read Answer >>
  3. Why is the U.S. dollar shown on the top of some currency pairs and on the bottom ...

    All currencies are traded in pairs. The first currency in the pair is called the base currency while the second is called ... Read Answer >>
  4. What are key economic factors that can cause currency depreciation in a country?

    Read about the causes of currency devaluation, and find out how to differentiate between relative and absolute currency devaluation. Read Answer >>
  5. Why isn't the EUR/USD currency pair quoted as USD/EUR?

    In a currency pair, the first currency in the pair is called the base currency and the second is called the quote currency. ... Read Answer >>
  6. Does renters insurance cover storage units?

    Learn how renters insurance coverage extends to a storage unit but is usually limited to a percentage of the total contents ... Read Answer >>
Hot Definitions
  1. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  2. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  3. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  4. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  5. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  6. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
Trading Center