商务英语第七单元

Notes:
• 1.Buying Rate and Selling Rate
The rate at which the dealer will sell the Foreign currency. The rate at which the dealer will buy the Foreign currency.
7.1.3 Methods of Quoting Exchange Rates
The direct quotation method
The indirect quotation method
The direct quotation method
• It’s the domestic currency price of one unit of foreign currency. e.g., $1= ¥ 6.8262 this is the direct quote on the Renminbi Most currencies,including Renminbi are quoted in direct quotes versus the u.s. dollar.
The indirect quotation method
• It’s the foreign currency price of one unit of domestic currency. • e.g., ¥ $ 0.1465 1= • this is the indirect quote on the Renminbi • The U.S. doller , the British pound and certain currencies historically linked to the British pound——the Irish,Australian,and New Zealand currencies——are quoted in this way.
• 1.dealings between banks and customers(commercial transactions); • 2.dealing between local banks and in some cases,including the central bank(market transactions); • 3.dealing between domestic banks and banks abroad(market transactions).
Option Forwards
Fixed Forwards
• 1.Definition: Fixed forward is settled or delivered on any pre-agreed date three or more business days after the deal date at an agreed-upon exchange rate.
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Two principal operators in the market
• 2.Brokers are the intermediaries acting on commissions between dealers.
broker
dealer
commission
dealer
Three tier dealings
Rule of quoting the spot rates:
• 3.The difference between the buying rate and selling rate is known as the “spread”or “margin”. • e.g., 1.6860 - 1.6850 = 10 points
7.1.4 Foreign Exchange Market Transactions
• Mainly consist of
Spot Transactions Forward Transactions
Swap Transactions
7.1.4.1 Spot Transactions • Characteristic: In a spot transaction,the settlement and delivery of currencies take place two business days after transaction date of the deal(the value date).
Notes: • The dealer’s maxim: • Direct rates:“buy low,sell high”; • Indirect rates:“buy high,sell low”.
Notes:
• 2.The rates quoted to his customers and The rates between the dealers themselves( Market Rates):
Learning Objectives:
• 3、Know the types of Foreign Exchange Market Transactions; • 4、Master key words 、 phrases and expressions in this section.
7.1.1 Definition of Foreign Exchange
• For direct rates: • Selling > Market
Rate Rates
>
Buying Rates
Notes:
• 3.Exchange expressions: • ①“favourable”and“unfavourable” In the case of direct rates,“low rates are favourable,high rates are unfavourable”. ②”appreciate”and”deprecia te”in the value of any particular currency
Definition of Foreign Exchange
• The third meaning of the term “foreign exchange”is that it covers the rates at which foreign exchange is quoted. • In this lesson,it covers the rates of exchange for different currencies and the related transactions.
7.1.2 Foreign Exchange Markets
• Characteristics: • It’s not located in any one place.it’s a global network of banks,brokers,and foreign exchange dealers connected by electronic communications systems . • The foreign exchange market is by far the largest and most liquid market in the world.
●In the first place,it means the system utilized in financing international payments; ●In the second place,it means the media used to discharge international obligations. forein currency, negotiable securities ,payment instruments
Usually one “point”may be carried to the fourth place to the right of the decimal in the quotation,namely 0.0001;
7.1.4.2 Forward Transaction
• A forward transaction is one that is transacted for delivery of currencies at some date beyond spot date ,at the pre-agreed rate. Fixed Forwards
2.The Forward Rate
• Almost always,the to the value of Apply forward price(rate)of a currency is at a foreign currency. “premium”Sometimes they areof the or at a “discount” spot rate. referred to as “swap rates”. • premium——dearer • discount ——cheaper
Four functions of foreign exchange markets
• • • • 1.tranfer of payments; 2.provision of credits; 3.payment at a distance; 4.allowing hedging against exchange risks.
Foreign Exchange Markets
• The most important trading centers are London,New York, Tokyo and Singapore.
Two principal operators in the market
• 1.The dealer Dealers are the persons , companies and banks who are authorized to deal in foreign exchange,acting as principals in buying and selling on their own accounts. The most important dealers are large commercial banks.
Spot Transactions
• Rule of quoting the spot rates: • 1.The spot rates consist of five numerical figures. • 2.Adopt two-way Price,the buying rate and selling rate are all presented,and the formal figure is smaller,the latter is larger. e.g.,$/DM 1.6850~1.6860
Two Sections
• 7.1 Foreign Exchange and Its Transactions • 7.2 Securities and Stocks
7.1 Foreign Exchange and Its Transactions • Learning Objectives: • 1、Know what are the Foreign Exchange and Foreign Exchange Market; • 2、Master two Methods of Quoting Exchange Rates;
Chapter 7
International Finance
Background Knowledge • 1.Foreign Exchange • 2. Foreign Exchange Markets Transactions • 3.International Securities Markets