Sub-subject: Foreign Exchange Market (FOREX).
Currency trading. Options. Syllabus:
- Introduction to the Foreign Exchange Market (FOREX).
- Financial crisis
- Bank for International Settlements.
- European Central Bank. The Euro.
- Tobin tax.
- Currency trading.
- Players: Central banks, companies, brokers, hedge funds, investors, and speculators.
- Currency exchange rates.
- Methods of managing exchange risk
- Types of coverage
- Exchange risk insurance
- Forward exchange contracts and currency options. Call/Put Options.
- Spot Market and Forward Market
- Vulnerability analysis.
- Case Study: balance of payments as a tool for credit risk
analysis of a market.
Objectives of the sub-subject - FOREX (Foreign Exchange Market):
- To analyse the fundamentals of Foreign Exchange Markets, understand their functioning and examine the agents operating in these markets.
- We will also look at various methods of managing exchange risk.
- Forward exchange contracts and currency options will be examined in detail.
Sample of the Sub-subject: Foreign Exchange Market (FOREX):
Finance of international trade - International bonds
Sub-Subject Description (Foreign Exchange Market FOREX):
The Foreign Exchange (FOREX) market is by far the biggest market in the World.
The 1.5 trillion dollars average daily turnover dwarfs the daily
turnover in all the World's stock and bond markets combined.
The New York Stock Exchange has a daily trading volume of approximately USD 30
billion. One trillion dollars (USD 1,000,000,000,000) changes hands every day
on global Foreign Exchange Markets. 80% of this trading is of a
speculative nature, buying and selling money for profit's sake.
Investing in foreign exchange remains mainly a domain of the big
professional players in the market such as hedge funds, banks, and brokers.
The currency exchange market is a true 24-hour market, five days a week. There are dealers in every major time zone.
The largest dealing centres are London (50% of the market), followed by New York, Tokyo, Zurich, Frankfurt, Hong Kong, and Singapore, Paris, and Sydney.
- The first session, which is the Asian session, begins on Sunday evening at approximately 7:00 p.m. EST (Sydney).
- The second session, which is the London session, starts at approximately 2:00 a.m.
- The third and final session, which is the New York session, begins at approximately 7:00 a.m. EST and ends at 5:00 p.m. EST.
The Bank for International Settlements (BIS) is an international organisation which fosters international monetary and financial cooperation and serves as a
Bank for central banks.
The currency exchange market determines currency exchange rates. A
currency exchange rate is always quoted for a currency pair using ISO code abbreviations.