Unit VIII- customs union and regional groupings

Views:
 
Category: Entertainment
     
 

Presentation Description

No description available.

Comments

Presentation Transcript

Unit VII: Foreign Exchange (FX) – Concept, Systems, and Markets : 

Unit VII: Foreign Exchange (FX) – Concept, Systems, and Markets Day and Date:

Unit Highlights… : 

Unit Highlights… Foreign exchange rate concept Exchange rate systems fixed flexible Exchange control Foreign exchange markets

Text book reference chapters… : 

Text book reference chapters… International Economics by Dominick Salvatore – Chapters 14,15 & 20 International Economics by Francis Cherunilam – Chapter 18

Foreign exchange rate…concept : 

Foreign exchange rate…concept Value of currency in terms of another.

Foreign exchange rate concept : 

Foreign exchange rate concept Spot exchange rate is the current exchange rate. Forward exchange rate is the rate which is quoted and traded today but for delivery and payment on a specific future date.

Foreign exchange rate concept : 

Foreign exchange rate concept Currency Quotations, Price and Unit currency Direct and Indirect Quote

Foreign exchange rate….Currency movements : 

Foreign exchange rate….Currency movements Appreciation/currency strengthening Depreciation/currency weakening

Factors affecting FX rate : 

Factors affecting FX rate Economic – Government budget, BOT, inflation, economic growth Political conditions Psychological – Investor pessimism/optimism

Exchange Rate Systems : 

Exchange Rate Systems Free/Flexible Pegged/Fixed

Exchange Control : 

Exchange Control Controls imposed by government on the purchase/sale of foreign currencies within the domestic economy such as, Ban/restrictions on possession and use of foreign currency within the country Restricting currency exchange to government-approved exchangers Fixed exchange rates Restrictions on the amount of currency that may be imported or exported

Foreign Exchange Transactions : 

Foreign Exchange Transactions Swaps Futures Options

Foreign Exchange Transactions…Swaps : 

Foreign Exchange Transactions…Swaps SPOT SALE of a currency combined with a FUTURE REPURCHASE of the same currency.

Foreign Exchange Transactions… Futures : 

Foreign Exchange Transactions… Futures FORWARD CONTRACT for STANDARDIZED CURRENCY AMOUNTS and SELECTED CALENDAR DATES traded on an organized market. STANDARDIZED CURRENCY - ¥,£,C$,€, Australian Dollar, Swiss Franc, Mexican Peso SELECTED CALENDAR DATES - 4 dates; 3rd Wednesday in March, June, September, and December)

Foreign Exchange Transactions…Options : 

Foreign Exchange Transactions…Options A contract giving the purchaser a right but not an obligation to BUY OR SELL a standard amount of a traded currency on a STATED /BEFORE A STATED DATE and a stated price. Buy – Call option; Sell – Put option Stated date – European option; Before a stated date – American option

Foreign Exchange Markets : 

Foreign Exchange Markets Market where foreign currencies are traded 24x7 market Global market Large volume of transactions Two tier market: First tier: ultimate customer and banker Second tier: between banks Participants include large banks, central banks, currency speculators, multinational corporations, governments, and other financial institutions.

To conclude… : 

To conclude… The need to understand FX concepts and market arises from an ever increasing integration of economies resulting in cross-border movements of commodities, capital, resources, and people.

You should now be able to understand, : 

You should now be able to understand, What is FX rate? What are FX markets? In what ways are they unique? What are fixed and flexible exchange systems?

authorStream Live Help