国际商务 The Foreign Exchange Market.ppt

Learning Objectives Be conversant with the functions of the foreign exchange market. Understand what is meant by spot exchange rates. Appreciate the role that forward exchange rates play in insuring against foreign exchange risk. Understand the different theories explaining how currency exchange rates are determined. Understand the differences between translation, transaction, and economic exposure, and what managers can do to manage each type of exposure. Case: Hyundai and Kia Face a Strong Won In 2006, the won rose in value by 7% against the US dollar. Profits at Hyundai and Kia dropped significantly as a result. These two companies may be forced to abandon their low-price strategy and to increase production outside Korea. Implications of the case p.200 Most enterprises in the global economy are impacted by changes in the value of currencies on the foreign exchange market. What happens in the foreign exchange market can have a very fundamental impact on the sales, profits, and strategy of an enterprise. Some of the international trade and investment risks exist because future exchange rates cannot be perfectly predicted. Introduction p.200 To explain how the foreign exchange market works. To examine the forces that determine exchange rates. To map the implications for international business of exchange rate movements. Introduction p.200 Foreign exchange market: A market for converting the currency of one country into the currency of another. Exchange rate: The rate at which one currency is converted into another. Foreign exchange risk: The risk that arises from the adverse consequences of unpredictable changes in exchange rates. 1. Functions of the foreign exchange market p200 What are the functions of foreign exchange markets? 1. Functions of the foreign exchange market p200 Two functions: Converting currencies Reducing risk (provide some insurance against foreign exchange risk). 1.1 Currency conversion p201 Companies receiving payment in foreig