国际金融chapter1.pptVIP

International  Finance Part one The Balance of payments and macroeconomic policy in an open economy Chapter 1 The foreign exchange market 1.1 Introduction The main contents of this chapter: 1.exchange-rate definitions→1.2; 2.various participants and the basic forces in the market→1.3~1.4; 3.various exchange-rate definitions and economic significance→1.5~1.6; 4.the determination of spot rate→1.7~1.8; 5.the determination of forward rate→1.9~1.10. 1.2 Exchange-Rate Definitions 1.2.1 Exchange rate: the price of one currency in terms of another. 1.2.2 Two methods of expressing it: 1.Direct quotation system:domestic currency units per unit of foreign currency 2.Indirect quotation system:foreign currency units per unit of domestic currency 1.3 Characteristics and Participants of the Foreign Exchange Market 1.3.1 Characteristics 1.is a worldwide market; 2.is made up primarily of commercial banks,foreign exchange brokers and other authorized agents; 3. the most heavily traded currency is the US dollar-vehicle currency. 1.4 Arbitrage in the Foreign Exchange Market Arbitrage:the exploitation of price differentials for riskless guaranteed profits. 1.Financial centre arbitrage: this type of arbitrage ensures that the exchange rate quoted in all the foreign exchange markets will be the same. Example: N:￡1=$1.89 L:￡1=$1.87 ￡1=$1.88 1.5 The Spot and Forward Exchange Rates 1.The spot exchange rate:the quotation between two currencies for immediate delivery;normally two-day lag to allow for verification,paperwork and clearing of payments. 1.6 Nominal,Real and Effective Exchange Rates 1.6.1 Nominal Exchange Rate 1.Nominal exchange rate:the exchange rate that prevails at a given date. 1.6.3 Effective Exchange Rate 1.6.4 Real Effective Exchange Rate Index 1.7 A simple model of the determination of the spot exchange rate The basic tenet: the exchange rate (the price) of a currency can be analyzed like any other price by a resor