The structure and functioning of foreign exchange markets
The several macroeconomic factors such as interest rates and inflation that impact foreign exchange rates
How are exchange rates quoted
The concepts governing foreign exchange markets such as Interest rate parity, purchasing power parity, forex reserves, balance of payments and central banks intervention as well as country risk (also known as ‘sovereign risk’ in some countries)
The causes and consequences of foreign exchange risks such as transaction exposure, translation exposure, operating exposure, etc. as well as the tools and techniques to manage those risks
It will also look at derivative products such as currency futures, currency swaps and currency options and their role in not only helping market participants to hedge against foreign exchange risks but also to speculate and make additional profits where possible
In this course, part of the Professional Certificate program ‘Risk Management in Banking and Financial Markets’, we will learn the theory and structure of foreign exchange markets, the instruments that are traded and the trading and settlement mechanisms. We will also learn how to identify, assess and manage foreign exchange risk as well as the role of derivative instruments in hedging these risks.
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 course will unravel those complexities and help you gain a comprehensive understanding of foreign exchange markets: the underlying theories, the instruments traded, the associated risks such as transaction exposure, operating exposure, translation exposure, etc. and how those risks are addressed/redressed using several techniques including using derivative instruments such as currency options, currency futures and currency swaps.
This course is part of IIMBx’s Professional Certificate program ‘Risk Management in Banking and Financial Markets’.
Basic knowledge of statistics, mathematics and familiarity with finance concepts.