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Chương 3 hoàn chỉnh

International Finance (Trường Đại học Kinh tế Thành phố Hồ Chí Minh)

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Chương 3: International financial market

✓ foreign exchange market,

✓ international money market,
✓ international credit market,
✓ international bond market,
✓ international stock markets.

Foreign exchange market

Characterists  allows for the exchange of one currency for another

 no centralized location => all around the globe
 connected by networks => telephone, computure, fax, telex,...
 sensitive to economic, political, social changes,...
 largest FOREX market in: London, Newyork, Tokyo
 most traded currency: USD

Spot market  market where immediate exchange occur

Spot market  interbank market (trading between banks)
structure  use of dollar widely

 based on the prevailing rates quoted by banks where the

Opening exchange markets have opened earlier.
rate quotations
 the level of trading activity => more people buy & sell => more
Spot market liquidity liquid.
 A currency’s liquidity affects the ease with which it can be
bought or sold by an MNC.
=> If a currency is illiquid, willing buyers and sellers is limited =>
MNC may be unable to purchase or sell that currency in a timely
fashion and at a reasonable exchange rate.

Attributes of Banks 1. Competitiveness of quote.

That Provide Foreign => A savings of $.01 per unit on an order of 1 million units of currency
Exchange is worth $10,000.

2. Special relationship with the bank.

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=> The bank may offer cash management services or be willing to make
a special effort to obtain hard-to-find foreign currencies for the
corporation.

3. Speed of execution.
=> Banks may vary in the efficiency with which they handle an order. A
corporation needing the currency will prefer a bank that conducts the
transaction promptly and also handles any paperwork properly.

4. Advice about current market conditions.

=> Some banks may provide assessments of foreign economies and
relevant activities in the international financial environment that relate
to corporate customers.

5. Forecasting advice
=> Some banks may provide forecasts of the future state of foreign
economies and the future value of exchange rates.

Bid/ Ask sread of  The difference between the bid and ask prices. =
Banks
(point of view bank)
 bid price (buy quote) < ask price (sell quote)
(buy a currency from customers at price < than the price they
sell).

 The bid/ask spread is normally expressed as a percentage of the

ask quote.

 exchange rate between 2 currencies should be familiar (not the

same) across the various bank.

Factors That Affect

the Bid/ Ask Spread
 order cost, inventory cost, currency risk => phải dùng Spread để
bù đắắp.
 competition => mang sức cạnh tranh cao hơn thì kh sợ đổi giá.
 volume => khốắi lượng giao dịch nhiềều.
Direct quotation >< Indirect quotation
Derivative Contracts 1. Forward contract => OTC, hedging.
in the Foreign 2. Futures Contracts => Exchange, hedging
Exchange Market 3. Options contracts

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=> Currency Call Option - the right to buy currency at a

specified strike price within a specified period of time
=> Currency Put Option - right to sell currency at specified
strike price within specified period of time

Short term Medium term Long term

Money market Credit market Stock market / Bond market

Money market
 In general, a country that experiences both a high demand for and a small supply of
short-term funds will have relatively high money market interest rates.
 Default risk

Bond Market
 exchange rate/ interest rate/ liquidity/ credit risk

Cross exchange rate amount of foreign currency per unit of another foreign currency
(2 đốềng tiềền dc tinh toán qua đốềng tiềền thứ 3)

vd:
cross division:
bid ask
AUD,USD a1 a2
JPY, USD b1 b2
AUD, JPY =? a1/b2 a2/b1
USD, JPY =? 1/b2 1/b1

a1/b2 và a2/b1 :để đảm bảo bid < ask.

vertical multiply:
bid ask
AUD,USD a1 a2
USD, JPY c1 c2
AUD, JPY a1 x c1 a2 x c2

bid ask
USD, JPY a1 a2
USD, AUD b1 b2

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AUD,JPY a1/b2 a2/b1

tử sốắ: dvt kh thay đổi

đọc có thi nha, phầền in đỏ, tm hiểu rủi ro từng cái, giao dịch cái gì

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