tailieunhanh - Lecture Financial institutions, instruments and markets (4/e): Chapter 16 - Christopher Viney

Chapter 16 - Determinants of the foreign exchange value of a currency. After completing this unit, you should be able to: Explain how exchange rates are determined, explain how exchange rates are determined. | Chapter 16 Determinants of the Foreign Exchange Value of a Currency Learning Objectives Explain how exchange rates are determined Describe the factors responsible for movements in the exchange rate Chapter Organisation Introduction FX Market and the Equilibrium Exchange Rate Factors Influencing Exchange Rate Movements Sensitivity of the Exchange Rate to Changes in Economic Variables Purchasing Power Parity Summary Introduction The structure and operations of the FX markets are considered in Chapter 15 Attention is now focused on the factors that influence the value of a currency (in a floating exchange rate regime) in order to attempt to forecast future exchange rates with some reliability and accuracy Introduction (cont.) A floating exchange rate regime is one in which the value of the currency is determined by demand and supply conditions A pegged exchange rate regime is where a domestic currency is locked into a multiple of another currency . | Chapter 16 Determinants of the Foreign Exchange Value of a Currency Learning Objectives Explain how exchange rates are determined Describe the factors responsible for movements in the exchange rate Chapter Organisation Introduction FX Market and the Equilibrium Exchange Rate Factors Influencing Exchange Rate Movements Sensitivity of the Exchange Rate to Changes in Economic Variables Purchasing Power Parity Summary Introduction The structure and operations of the FX markets are considered in Chapter 15 Attention is now focused on the factors that influence the value of a currency (in a floating exchange rate regime) in order to attempt to forecast future exchange rates with some reliability and accuracy Introduction (cont.) A floating exchange rate regime is one in which the value of the currency is determined by demand and supply conditions A pegged exchange rate regime is where a domestic currency is locked into a multiple of another currency such as the USD . Hong Kong dollar Chapter Organisation Introduction FX Market and the Equilibrium Exchange Rate Factors Influencing Exchange Rate Movements Sensitivity of the Exchange Rate to Changes in Economic Variables Purchasing Power Parity Summary FX Market and the Equilibrium Exchange Rate Demand for a currency To purchase Australian goods and services, foreigners must buy AUD Downward sloping demand curve occurs as the devaluation of AUD results in a greater demand by foreigners For foreigners, a fall in the price of the AUD is equivalent to a reduction in the price of everything in Australia FX Market and the Equilibrium Exchange Rate (cont.) Supply of a currency Upward sloping supply curve occurs as the quantity of AUDs supplied to the FX market increases as the price of the AUD increases As the AUD appreciates, the price of foreign currency falls, making foreign goods cheaper for Australian residents The demand for foreign currency

• Tài chính doanh nghiệp
• Financial institutions
• Financial Instruments
• Financial markets
• Financial system
• Equilibrium exchange rate
• Foreign exchange value
• Lecture Financial markets and institutions
• Financial institutions markets
• Risks at financial institutions
• Market risk
• Savings institutions
• Credit unions
• Commercial banks
• Financial statements
• Financial markets and institutions
• Interest rates change
• Financial institutions exist
• Central banking
• Capital markets
• Money markets
• Interest rate fundamentals
• Interest rates
• Security valuation
• Federal reserve system
• Monetary policy
• Money market yields
• Bond markets
• Municipal bonds
• Mortgage markets
• Primary mortgage market
• Stock markets
• Common stock
• Foreign exchange markets
• Foreign exchange
• Derivative securities markets
• Futures markets
• Commercial bank liabilities
• Regulation of commercial banks
• Deposit guarantee funds
• Insurance companies
• Life insurance companies
• Securities firms
• Investment banks
• Mutual funds
• Hedge funds
• Pension funds
• Private pension funds
• Managing credit risk
• Balance sheet
• Managing liquidity risk
• Managing interest rate risk
• Insolvency risk
• Managing risk
• Loan sales
• Managing risk off the balance sheet