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Table Of Contents

Accept it Transfer it Reduce it Eliminate it
Need for Foreign Exchange
Objective
Methodology of the study
Limitation of Study
THE HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC)
CAPITAL STRUCTURE
AWARDS 2010
1. CUSTOMERS
2. COMMERCIAL BANK
3. CENTRAL BANK
4. EXCHANGE BROKERS
5. OVERSEAS FOREX MARKET
6. SPECULATORS
Types of currencies traded in Indian Market
Growth of forex market over the years
FEDAI's role in the forex market
Authorized dealers in foreign exchange
Rupee quoted against Dollar
Activities that can possibly carry foreign exchange exposure
Authorized money-changers and the powers they are they vested with
Step 1 – Understanding Risks
1. Price Risks or Market Risk
2. Counter party Risk or Credit Risk
3. Dealing Risk
4. Settlement Risk
5. Operating Risks
Step 2 - Define Risk Policy
Deficit & Surplus
Capital Account
OVERVIEW (a) Goals
(b) Exchange risk
MANAGEMENT FOREIGN EXCHANGE RISK-BY A FIRM
Economic Exposure, Purchasing Power Parity & The International Fisher Effect
Foreign Exchange Forecasting
I. Gold standard
II. Definition of Arbitrage
There are two methods of quoting exchange rates
Direct method:
Indirect method:
Method of Quotation
THE ADVANTAGE OF TWO-WAY QUOTE IS AS UNDER:
BASE CURRENCY
BID &OFFER RATES
CROSS RATE CALCULATION
Consider the following structure:
FACTOR AFFECTING EXCHANGE RATES
STRENGTH OF ECONOMY
POLITICAL FACTOR
EXPACTATION OF THE FOREIGN EXCHANGE MARKET
Various options available in forward contracts:
i. INTRINSIC VALUE:
iii. Naked Options:
1. DIRECT VS INDIRECT QUOTE
2. FIXED VS FLOATING QUOTE
3. SPOT VS FORWARD EXCHANGE RATE
DIFFERENT KINDS OF TRANSACTIONS IN FOREX MARKET
1) SPOT MARKET
2) FORWARD MARKET
a) ARBITRAGE IN FORWARD MARKET
b) FORWARD MARKET HEDGING
c) SPECULATION IN FORWARD MARKET
FORWARD RATE
COMPUTATION OF FORWARD EXCHANGE RATE
i. CURRENCY FUTURE
a. FOREIGN CURRENCY ARBITRAGE
b. HEDGING WITH CURRENCY FUTURES
c. SPECULATION WITH CURRENCY FUTURES
Types of Speculation
3) CURRENCY OPTIONS MARKET
I. HEDGING IN CURRENCY OPTIONS
II. SPECULATION WITH CURRENCY OPTIONS
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Foreign Exchange in PDF

Foreign Exchange in PDF

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Published by Arun Kumar

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Published by: Arun Kumar on Jan 18, 2012
Copyright:Attribution Non-commercial

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11/04/2012

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