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TeachMeFinance.com - explain Covering historic definition... Covering -- In foreign exchange dealings covering ordinarily consists in paying one bill of exchange (draft) with another. For example, a foreign exchange dealer in New York draws and sells a bill on London due in 60 days. When the bill matures (falls due) he takes it up (pays it) with a demand bill (bill payable immediately) which he has purchased. Again : A dealer in New York draws and sells a bill on London and buys a bill on Paris for an equivalent amount which he forwards to London in cover or discharge (in payment) of the bill which he sold on London. Covering also is a speculative term, meaning the act of buying stocks or commodities for the purpose of closing short contracts in other words, buying back stocks or commodities previously sold, but which were not possessed when sold. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2007 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.