Learning Outcomes

The architecture of foreign exchange markets, the motivation of participants in foreign exchange markets (arbitrage, speculation, hedging), the role of conventions in exchange rates quotation and trading in foreign exchange markets, the type of foreign exchange operations (spot, forward, FX swaps, currency swaps, futures and option), the factors that influence the price of currency derivatives (forward rate, swap points, interest rates, futures price, option premium), the relationship between the changes of exchange rates and the dynamics of  fundamental economic factors (balance of payments, inflation, interest rates, expectations), the prediction of future exchange rates movements by the tools of technical analysis, the changes of foreign currency regime since the crash of Bretton Woods regime of fixed exchange rates, the nature of foreign exchange exposure and risk and its management, the structure of the balance of payments and main relations between economic transaction in the balance of payments.