Wednesday, February 17, 2010

What are eurodollars?

The term eurodollar very often tend to confuse investors into believing that the instrument is related to the dollar or the euro. The eurodollar is a deposit, cd or NCD  that a united states bank will have with a bank outside of the united state. Hence if a European bank has a deposit, cd or NCD at a bank in Australia then it will be called a Euroeuro. And finally if a Japanese bank will have a deposit , cd or NCD with a bank in France it will be called a euroyen

The advantage of eurodollars is that because they are less liquid then normal NCDs the return on them is greater. The eurodollar however is only to large institutions so your best et to have exposure to them is through

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