国际金融课件chap03-The Foreign Exchange Market-1.ppt

Chap 3The Foreign Exchange Market 3.1 Basics of Currency Trading 3.2 Foreign Exchange Market Activity 3.3 Demand and Supply for Foreign Exchange 3.4 Foreign Exchange Trading 3.1 Basics of Currency Trading Exchange rate is important for currency trading because Each country has its own currency, and hence monetary policy. Countries are open, i.e., non-zero international trade existing among countries. Exchange rate market facilitates the trade of goods between two countries What is foreign exchange? The act of trading different nations’ moneys. The greater part of the money assets traded are demand deposits in banks. A very small part consists of coins and currency of the ordinary pocket variety. It also refers to the holdings of foreign currencies. What is exchange rate? The price of one currency in terms of another currency. Examples: the price of USD in terms of HKD, 7.78 HKD/USD the price of USD in terms of Yen, 83.87 Yen/USD There are two basic types of exchange rate, depending on the timing of the actual exchange of moneys. Spot and Forward Exchange Rate The spot exchange rate is the price for immediate exchange (it means exchange or delivery in two working days). The forward exchange rate is the price agreed to today for exchanges that will take place sometime in the future (such as 30, 90, or 180 days from now). Where can you find the rates? For examples: Many newspapers, see Figure 3.1 on page 33. Website of various bank traders Bloomberg: Many others available in our Internet resources page. 3.2 Foreign Exchange Market Activity Examples based onCentral Bank Survey of Foreign Exchange and Derivatives Market Activity (2010) Bank for International Settlements (BIS)-Monetary and Economic Department-Basle, May 1999 (Full report available in pdf format at the BIS web site ) Background about the BIS survey BIS started to conduct the triennial survey of foreign exchange market activity since 1986. In April 1998, 43 central banks and monetary authoriti