国际金融英文版第三章课件.pptVIP

CHAPTER 3 THE FOREIGN EXCHANGE MARKET Foreign Exchange Foreign exchange is the act of trading different nations’ moneys. Demand deposits in banks Paper moneys Coins Foreign exchange rate is the price of one nation’s money in terms of another nation’s money. Foreign Exchange Market The foreign exchange market is the market in which national moneys are traded for other national moneys. 24-hour market / geographic dispersion Enormous trading volumes ($3.2 trillion on Forex vs. $100 billion on NY Stock Market per day,2007) Most trading involves U.S. dollars Retail vs. Interbank part of the market 24-Hour Market Sidney 7:00-12:00 Tokyo 8:00-14:00 Hong Kong/Singapore 9:00-16:00 Frankfurt Summer 14:00-23:00 Winter15:00-0:00 London Summer 15:00-23:30 Winter 16:00-0:30 New York Summer 20:30-3:00 Winter 21:30-4:00 West Coast Summer 21:30-4:00 Winter 22:30-5:00 Geographical Dispersion Market Size Market Size As of Apr.2010, average daily turnover is estimated at $3.98 trillion. Market Size Most traded currencies Most traded currencies Top 10 currency traders Levels of Access Stock market vs. Forex market: No central exchange: OTC market Forex market is divided into levels of access. Retail parts vs. Interbank parts Trading volume Difference in spreads : difference between bid and ask price Retail Markets Inter-bank Market Suppose that bank in London may be unwilling to continue holding the pounds… The inter-bank market accounts for more than 40% of all transactions. Participants in inter-bank market: commercial banks and investment banks Active participants in retail part of the market: smaller investment banks, multi-national corporations, hedge funds, pension funds, insurance companies, mutual funds, other institutional investors Exchange Rates An exchange rate is the price of one currency in terms of another currency. ·??? Two currencies involved ·??? Timing of delivery 1.? Spot 2.?? Forward (An other rate is the future spot rate.) Exchange Rates A