Presentation on theme: "THE FOREIGN EXCHANGE MARKET"— Presentation transcript:
1 THE FOREIGN EXCHANGE MARKET CHAPTER 3THE FOREIGN EXCHANGE MARKET
2 [teaching targets and demands] To make students master the concepts such as exchange rate , arbitrage, etc, and the structure and function of the foreign exchange market, and the demand and supply for foreign exchange, and the methods to arbitrage within the spot exchange market.
3 [Teaching key and difficult points] The demand and supply for foreign exchange, and the methods to arbitrage within the spot exchange market.
4 [Content of courses ]The basics of currency trading: using the foreign exchange market, Inter-bank foreign exchange trading;Demand and supply for foreign exchange: Floating exchange rates, Fixed exchange rates, Current arrangements;Arbitrage within the spot exchange market
9 2.1 The basics of currency treading 2.1.1 Exchange Rateexchange rate is the price of one currency in terms of another currency.· Two currencies involved· Timing of delivery1. Spot2. Forward
10 Conceptions1 foreign exchange: the trade of one national currency for another.2. exchange rate :the price at which two national currencies are traded3. spot exchange rate: the price for "immediate" exchange.4. forward exchange rate: the price for an exchange that will take place sometime in the future.
31 2.2 Demand and supply for foereign exchange 2.2.1 Influential factors of foreign exchangeSupplyDemand
32 Demand and supply for foreign exchange (1)U.S exports of goods and services will create a supply of foreign currency and a demand for U.S. dollars.美国的商品和服务的出口将造成大量的外国货币供应量和对美元的需求。(2)U.S imports of goods and services will create a demand for foreign currency and a supply of U.S. dollars.美国的商品和服务进口将创建一个为外国货币需求量和美元的供给需求
33 (3)U.S capital outflows will create a demand for foreign currency. 美国资本外流将创建一个为外国货币的需求。(4)U.S capital inflows will create a supply of foreign currency.美国资本流入将创造大量的外国货币供应量。一国商品和劳务的出口形成了外币的供给，进口形成对外币的需求。对国外金融资产的购买形成外币的需求，外国对本国金融资产的购买形成了外币的供给。
36 2.2.2 floating exchange rate system a system in which the exchange rate of a currency is determined in the marketplace and not by government or central bank intervention.
37 2.2.3 fixed exchange rate system a system in which officials try to keep the exchange rate of a currency pegged even if the rate they choose differs from the equilibrium rate.
38 Conceptions1. depreciation: a fall in the market price of a floating currency (贬值)2. appreciation: a rise in the market price of a floating currency.（升值）
39 3. devaluation: a discrete official reduction in the otherwise fixed par value of a currency.（法定贬值,下浮）4. revaluation: a discrete official increase in the otherwise fixed par value of a currency.（法定升值，上浮）
40 appreciation and revaluation depreciation and devaluationappreciation and revaluation含义一样吗？
46 2.2.3 Current Arrangement（各国汇率制度安排） 1、most major currencies have floating exchange rates to each other.2、dirty floating exchange rate. (Large number)3、fixed exchange rate pegged to USD.4、 fixed exchange rate pegged to euro.
47 2.3 Arbitrage within the spot exchange market 1. arbitrage: the process of buying and selling to make a (nearly) risk-less pure profit.Buying a currency in one market （e.g. New Yorkmarket or spot market ）where price is low ，andselling in another market （London market or forward market）where the price is higher .
48 Arbitrage “Pay nothing for something,” or “get something for noting” “there is not such thing as a free lunch”Any deviation from “the law of one price” will present an arbitraging opportunity!Basic strategy: “buy low, sell high”!An arbitraging strategy is risk-free. In contrast, a speculative strategy is always associated with some degree of risk48
49 ArbitrageurA person or company who undertake a set of transactions involving buying in one market and selling in another , where the price are known simultaneously . Thus , although a profit can be made if the prices are different , an arbitrageur takes very little risk .
50 2 triangular arbitrage: the process of making a risk-less profit by arbitraging through three exchange rates.
51 A. Direct Arbitrage /Two Points Arbitrage 直接套汇/两地套汇 （即期+即期）
57 汇率及其表示方法 The Quotations of Exchange Rate 汇率（exchange rate）又称汇价 （exchange price），是一国货币折合成 另一国货币的比率或比价。可以把汇率理 解为外汇这一特殊资产的价格。
58 Direct Quotation , Indirect Quotation There are two basic methods of xchange rate quotation .one is a direct quotation , which means one unit of a foreign currency is worth a given number of currency of the home currency .以一定单位的外国货币为标准，计算应折合若干单位的本国货币。（应付法）
59 The other is indirect quotation ， which means one unit of a home currencyis equal to a given number of a foreigncurrency.以一定单位的本国货币为标准，计算应折合若干单位的外国货币。（应收法）
62 1. Buying Rate ，Selling Rate Buying Price ， Bid Rate ：the bid rate for currency A in terms of B is the rate at which Dealers buy currency A （sell currency B ）.买入价与卖出价买入价: 就是用B货币计算的A货币的价格，也就是交易商（银行）用B货币买入A货币的价格。A 货币= B货币
63 Selling Price ，Offer Rate： is the rate at which dealers sell currency A （buy currency B ）.卖出价: 就是银行卖出A货币（买入B货币）的汇率。A 货币= B货币
64 That is ，they are in fact two prices . One is the price at which he will buy and theother is the price at which he will sell .换言之，他们实际上是两个汇率,一个是交易者要购买的汇率, 另一个是他要出售的汇率。
65 A Swiss Bank quotation ： $ 1 = SF 1.3278-----1.3290 For example :A Swiss Bank quotation ：$ 1 = SFIn the example above , the small rate is thebuying rate or the bid price while the higher rateis the selling rate or offer price .举例，一家瑞士银行的报价如下： $1=SF。在上例中, 较低的汇率是买入价,较高的汇率是卖出价。
66 Banks bid to buy foreign exchange at a lower rate and ask to sell it at a higher rate . Thedifference between buy and sell rate is called thespread or margin，which gives banks their profit from dealing in foreign exchange transactions.————————差价可用百分比表示，计算公式是：（卖价- 买价）/买价×100银行以比较低的价格买进外汇，再以比较高的价格卖出外汇，从中获取差价。
71 2. Basic Rate ，Cross Rate ： 基础汇率与套算汇率Basic rate is an exchange rate of keycurrency （usual is US dollar） in terms ofnational currency.
72 Cross exchange rate is an exchange rate between two currencies ，A and B ，neither of which is the USD. It can becalculated as ratio of exchange rate of Ato the Dollar.，divided by the exchangerate of B to the Dollar.套算汇率就是两个非美元之间的汇率，可以通过美元汇率计算出来。
77 Fixed Exchange Rate：a rate of exchange between one currency and another that isfixed by government and maintained by thatgovernment buying or selling its currency tosupport or depress its currency.固定汇率： 一种货币对另一种由政府固定货币的汇率。政府通过买卖该种货币保持币值的稳定或低估。
78 Floating Exchange Rate ：an exchange rate between one currency and others that ispermitted to float accounting to market forceswith no government or central bank action tokeep it stable . This is also known as a flexibleexchange rate .浮动汇率: 一种根据市场浮动而没有政府或中央银行干预的汇率。又称之为有弹性的汇率。
79 4. Spot Exchange Rate ，Forward Exchange Rate 即期汇率与远期汇率 5. Official Exchange Rate ，Market Exchange Rate官方汇率与市场汇率6. Opening Rate ，Closing Rate开盘价和收盘价Forward Rate ：the fixed price at which a given amount of a currency at a specified time in the future.远期汇率：一种事先确定的在未来的时间交易一定量货币的价格。Opening Rate：Rate in a currency exchange at the beginning of a day‘s trading .是指在一个营业日开始时交易的汇率。Closing Rate ：Rate in a currency exchange at the end of a day‘s trading .是指一个营业日结束时交易的汇价。Effective Exchange Rate :A country’s exchange rate , taking weighted average of its bilateral normal exchange rates against other currencies .有效汇率: 是各种双边汇率的加权平均
80 Notice：第1，凡是外汇必须是以外币表示的各种支付工具。First ， FX must be the means ofpayments in terms of foreign currencies.
81 第2，凡是外汇，必须是可自由兑换货币 。Second ，FX must be a convertiblecurrency .