Leads And Lags

A A A

DEFINITION

The alteration of normal payment or receipts in a foreign exchange transaction because of an expected change in exchange rates. An expected increase in exchange rates is likely to speed up payments, while an expected decrease in exchange rates will probably slow them down.

INVESTOPEDIA EXPLAINS

Accelerating the transaction is known as "leads", while slowing it down is known as "lags". Leads will result when firms or individuals making payments expect an increase in the foreign-exchange rate, while lags arise when the exchange rate is expected to fall. Leads and lags are used in an attempt to improve profits.


RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. An exchange rate ...
  2. Currency Basket

    A selected group of currencies in which the weighted average is used as a measure ...
  3. Foreign Currency Effects

    The gain or loss on foreign investments due to changes in the relative value ...
  4. Transaction Exposure

    The risk, faced by companies involved in international trade, that currency ...
  5. Translation Exposure

    The risk that a company's equities, assets, liabilities or income will change ...
  6. Foreign-Exchange Risk

    1. The risk of an investment's value changing due to changes in currency exchange ...
  7. ICE LIBOR

    See LIBOR
  8. WM/Reuters Benchmark Rates

    Spot and forward foreign exchange rates that are used as standard rates for ...
  9. Open Position Ratio

    The percentage of open positions held for major currency pairs relative to the ...
  10. Indirect Quote

    A currency quotation in the foreign exchange markets that expresses the amount ...
Related Articles
  1. Currency Exchange: Floating Rate Vs. ...
    Forex Education

    Currency Exchange: Floating Rate Vs. ...

  2. Dual And Multiple Exchange Rates 101
    Forex Education

    Dual And Multiple Exchange Rates 101

  3. What are leading, lagging and coincident ...
    Investing

    What are leading, lagging and coincident ...

  4. What Would Have To Happen For The Iraqi ...
    Forex Fundamentals

    What Would Have To Happen For The Iraqi ...

  5. Is the Iraqi Dinar Investment a Wise ...
    Forex Fundamentals

    Is the Iraqi Dinar Investment a Wise ...

  6. Seven Emerging Currencies Challenging ...
    Forex Fundamentals

    Seven Emerging Currencies Challenging ...

  7. The Best Day-Trading Schools
    Trading Strategies

    The Best Day-Trading Schools

  8. Covered Interest Arbitrage
    Forex Strategies

    Covered Interest Arbitrage

  9. For Individual Investors, These May ...
    Active Trading Fundamentals

    For Individual Investors, These May ...

  10. The Insiders Who Fix Rates for Gold, ...
    Investing Basics

    The Insiders Who Fix Rates for Gold, ...

comments powered by Disqus
Hot Definitions
  1. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  2. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  3. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  4. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  5. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  6. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
Trading Center