Ch12_Foreign_Exchange(国际经济学-西北大学(美国)).pdf

International Economics By Robert J. Carbaugh 9th Edition Chapter 12: Foreign Exchange Copyright ©2004, South-Western College Publishing Foreign exchange Foreign exchange market Largest and most liquid market in the world No central market - key markets in several cities around the world Participating banks and brokers are in constant contact via phone and computer Three general types of transaction  Between banks and their customers  Domestic interbank market conducted through brokers  Trading with overseas banks Carbaugh, Chap. 12 2 Foreign exchange Types of FX transactions Spot transactions - executed nearly immediately Forward transactions - agreement to buy or sell a currency at a date in the future, at a rate agreed in advance Currency swaps - agreement to trade one currency for another now, and to trade currencies back again later, both at prices agreed at the beginning Carbaugh, Chap. 12 3 Foreign exchange Foreign exchange quotations Exchange rate is the price of one currency in terms of another One country’s currency has depreciated when more of it is needed to buy a unit of a foreign currency (is worth less relative to the other currency) A currency has appreciated when less of it is needed to buy a foreign currency (is worth more relative to the other currency) Carbaugh, Chap. 12 4 Foreign exchange Foreign exchange quotations Cross exchange rate between two currencies is calculated from their exchange rates with a third, benchmark currency - frequently the US dollar Carbaugh, Chap. 12 5 Foreign exchange markets