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Eurodollar

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Definition of Eurodollar

Eurodollar Image 1

Eurodollar

This is an American dollar that has been deposited in a European bank or an U.S. bank branch
located in Europe. It got there as a result of payments made to overseas companies for merchandise.



Related Terms:

Eurodollar bonds

Eurobonds denominated in U.S.dollars.


eurodollars

Dollars held on deposit in a bank outside the United States.


Eurodollars

Deposits denominated in U.S. dollars but held in banks located outside the United States, such as in Canada or France.


Either/or facility

An agreement permitting a bank customer to borrow either domestic dollars from the
bank's head office or eurodollars from one of its foreign branches.


Either-way market

In the interbank eurodollar deposit market, an either-way market is one in which the bid
and offered rates are identical.



London International Financial Futures Exchange (LIFFE)

A London exchange where eurodollar futures
as well as futures-style options are traded.


London International Financial Futures Exchange (LIFFE)

London exchange where eurodollar futures as well as futures-style options are traded.


Eurodollar Image 2

Neutral period

In the Euromarket, a period over which eurodollars are sold is said to be neutral if it does not
start or end on either a Friday or the day before a holiday.


Placement

A bank depositing eurodollars with (selling eurodollars to) another bank is often said to be
making a placement.


Regulation M

Fed regulation currently requiring member banks to hold reserves against their net borrowings
from their foreign branches over a 28-day averaging period. Reg M has also required member banks to hold
reserves against eurodollars lent by their foreign branches to domestic corporations for domestic purposes.


TED spread

Difference between U.S. Treasury bill rate and eurodollar rate; used by some traders as a
measure of investor/trader anxiety.


Tom next

In the interbank market in eurodollar deposits and the foreign exchange market, the value
(delivery) date on a Tom next transaction is the next business day. Refers to "tomorrow next."


Value date

In the market for eurodollar deposits and foreign exchange, value date refers to the delivery date
of funds traded. Normally it is on spot transactions two days after a transaction is agreed upon and the future
date in the case of a forward foreign exchange trade.



 

 

 

 

 

 

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