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The Foreign Exchange Market (When? (Income (Export, Investments,…
The Foreign Exchange Market
Function
Convert Currency
Provide Insurance against Foreign Exchange Risk
Hedging
When?
Income
Export
Investments
Licensing
Payment
Investments
Arbitrage
Currency Speculation
Spot Exchange Rate
Foreign Exchange Risk Reduction
Currency Swap
Forward Exchange Rate
What
Global Network
Connected by e-communications
Never sleep
Factors Influence Exchange Rates
Price Inflation
Law of one price
Purchasing Power Parity theory
Interest Rate
International Fisher Effect
Investor Psychology
Bandwagon effect
Exchange Rates Prediction
Fundamental Analysis
Money Supply Growth
Inflation Rate
Nominal Interest Rates
Balance-of-payment positions
Technical Analysis
Currency Convertibility
Freely Convertible
Externally convertible
Non-convertible
Countertrade
Prevent Capital Flight
Meaning for Managers
Transaction Exposure
Translation Exposure
Economic Exposure
Minimize Risk
Buy Forward
Use Swaps
Lead strategy
Lag strategy