Leads And Lags

AAA

DEFINITION of 'Leads And Lags'

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 'Leads And Lags'

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. ...
  2. Currency Basket

    A selected group of currencies in which the weighted average ...
  3. Foreign Currency Effects

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

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

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

    1. The risk of an investment's value changing due to changes ...
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. Forex Exotic Currency Trading: Risks ...
    Fundamental Analysis

    Forex Exotic Currency Trading: Risks ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center