Eurodollars

[kagi]

What is the Eurodollar I have seen the definition of it as US Dollars deposited in foreign (to the US) banks. Why does its value change? Why is it different from a dollar in the USA? Is it different?
Hope someone can help answer these questions or point me in the right direction to find out.

 

[Rhody Trader]

What is the Eurodollar I have seen the definition of it as US Dollars deposited in foreign (to the US) banks. Why does its value change? Why is it different from a dollar in the USA? Is it different?
Hope someone can help answer these questions or point me in the right direction to find out.

The value of the Eurodollar contract (I presume you are framing your questions in regards to the futures) changes as short-term US interest rates change. Think of it like a Treasury Bill. When rates increase, the price of the T-Bill declines, and vice versa. Eurodollars operate the same way.