当代全球商务第七版配套课件Chap9.pptVIP

Global Business Today 7e by Charles W.L. Hill Chapter 9 The Foreign Exchange Market Introduction Question: What is the foreign exchange market? Answer: The foreign exchange market is a market for converting the currency of one country into that of another country Question: What is the exchange rate? Answer: The exchange rate is the rate at which one currency is converted into another The Functions of the FX Market Question: What is the purpose of the foreign exchange market? Answer: The foreign exchange market enables the conversion of the currency of one country into the currency of another provides some insurance against foreign exchange risk - the adverse consequences of unpredictable changes in exchange rates Currency Conversion International firms use foreign exchange markets to convert export receipts, income received from foreign investments, or income received from licensing agreements to pay a foreign company for products or services to invest spare cash for short terms in money markets for currency speculation - the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates Insuring Against FX Risk The foreign exchange market can be used to provide insurance to protect against foreign exchange risk - the possibility that unpredicted changes in future exchange rates will have adverse consequences for the firm a firm that protects itself against foreign exchange risk is hedging The market performs this function using spot exchange rates forward exchange rates currency swaps Insuring Against FX Risk 1. Spot Exchange Rate - the rate at which a foreign exchange dealer converts one currency into another currency on a particular day determined by the interaction between supply and demand, and so change continually Insuring Against FX Risk 2. Forward Exchange Rates - the exchange rate governing a forward exchange A forward exchange occurs when two parties agree to