Foreign Exchange Markets – Instruments, Risks and Derivatives | IIMBx on edX
Posted on June 7, 2018 by Phil
[youtube https://www.youtube.com/watch?v=DAu-eMvUt4o&w=560&h=315]
[MUSIC PLAYING] PC NARAYAN: Rapid globalizationover the last few decades has resulted in an exponentialincrease in cross-border trade and flow of capital across countries.
That, in turn, has resulted in aninterconnected ecosystem of banks and financial institutions acrossthe world engaged in foreign exchange transactions that are continuouslygrowing in volume, sophistication, and complexity.
That, in turn, has attracted a plethoraof participants in the foreign exchange markets whose explicit intentionis to either profit from or hedge against the risks implicit in virtuallyall foreign exchange transactions.
My name is PC Narayan.
I have been with the Indian Instituteof Management Bangalore for the last 13 years, engaged in teaching,research, and consulting, primarily in the area of banking and finance.
This course, titledForeign Exchange Markets– Instruments, Risks,and Derivatives, will help you unravel the intricaciesassociated with foreign exchange markets and the complex transactionsundertaken in those markets.
So what can you expectto learn in this course? Well, firstly, the theoriesgoverning foreign exchange, such as interest rate parity,purchasing power parity, nominal versus real exchange rates,et cetera; transactions traded in the foreign exchange market,such as spots, forwards, swaps, et cetera; how are exchangerates quoted; who are the participants in theforeign exchange market; why and how do central banks intervenein the foreign exchange markets; the natural type of risksencountered in the foreign exchange markets, such as transaction exposure,operating exposure, translation exposure, and so on; how are theserisks identified and managed; and finally, the structure androle of currency derivatives, such as currency swaps, currencyoptions, currency futures, et cetera.
So join me in this interestingjourney to understand foreign exchange markets, which, as youmight already be aware, is one of the largestand perhaps the most complex of financialmarkets in the world today.
I look forward to seeingyou in the course.
Foreign Exchange Markets - Instruments, Risks and Derivatives | IIMBx on edX
Delve into the fascinating world of Foreign Exchange Markets and Currency Derivatives as you learn the theories and practices that govern foreign exchange.
Take this course free on edX: https://www.edx.org/course/foreign-exchange-markets-instruments-iimbx-fc202x#!
Thanks to the economic liberalization in several countries over the last few decades, the world has witnessed an exponential increase in the free flow of capital across countries, even more so in emerging economies. This has resulted in a globally interconnected ecosystem of banks and financial markets engaged in foreign exchange transactions that are continuously growing in volume, sophistication and complexity. That, in turn, has attracted a plethora of participants whose explicit intention is to either profit from or hedge against the heightened level of risks in the foreign exchange markets.
This economics and finance course will unravel those complexities and help you gain a comprehensive understanding of foreign exchange markets: the underlying theories, the instruments traded and how the associated risks and potential adverse outcome are addressed/redressed using several techniques such as currency derivatives.
Theories governing foreign exchange:
- Interest rate parity
- Purchasing power parity
- Nominal vs real exchange rates, etc.
- Types of transactions in the foreign exchange markets
How are exchange rates quoted and traded?
Participants in the foreign exchange market
Why and how do Central Banks intervene in the foreign exchange markets?
Nature and types of foreign exchange risks
- Transaction Exposure
- Operating Exposure
How are foreign exchange risks identified and managed?
Role of 'currency derivatives' in the foreign exchange markets, both for speculation and for hedging:
- Currency Futures
- Current Options
- Currency Swaps
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