国际货币和金融经济学课件02.pdfVIP

INTERNATIONAL MONETARY AND FINANCIAL ECONOMICS Chapter 2 Third Edition The Market for Foreign Exchange Joseph P. Daniels David D. VanHoose Copyright © South-Western, a division of Thomson Learning. All rights reserved. The Foreign Exchange Market • Exchange Rate –The value of one currency relative to another currency as the number of units of one currency required to purchase one unit of the other currency. • Foreign-Currency-Denominated Financial Instrument –A financial asset, such as a bond, a stock, or a bank deposit, whose value is denominated in the currency of another nation. 2 Spot Market Characteristics • It is the oldest and largest financial market in the world: – Has no central trading floor where buyers and sellers meet. – Is open twenty-four hours a day, except for short gaps on weekends. – The spot market is a market for immediate delivery (2 to 3 days). • Primarily an interbank market, which is the trading of foreign- currency-denominated deposits between large banks. – Global banks account for about two-thirds of the market volume, while foreign exchange brokers and dealers account for approximately 20 percent. • Approximately $US1.4 - 1.6 trillion daily in global transactions. 3 A Foreign Exchange Transaction • Toshiba receives a dollar denominated payment from Best Buy, which they present to Fuji Bank. • To exchange the dollar payment for the yen