The seminar turns to the foreign exchange market – the market with the biggest volume of trade. Various aspects of this market are explained, such as quotation conventions, types of brokers, and examples of cross rates. Economic theories of exchange rates are briefly presented here along with central banks’ policies. Forward rates are introduced together with currency swaps. Interest-rate parity is explained with several useful examples.

 

At the end of Intrinsic Value's training seminar in the foreign exchange market the participant should be able to:

􀂅  Define an exchange rate.

􀂅  Describe the interbank market.

􀂅  Define decentralized, continuous, open bid and double-auction.

􀂅  Define direct and indirect-term quotations.

􀂅  Compare   and   contrast  direct  dealing,  foreign  exchange  brokers  and

     electronic systems.

􀂅  Define the trading terms “mine” and “yours”.

􀂅  Define the trading term “big figure”.

􀂅  Define a cross-rate and a cross-trade.

􀂅  Calculate a cross-rate given two exchange rates.

􀂅  Describe some economic factors that might affect exchange rates.

􀂅  Discuss central bank intervention.

􀂅  Discuss spot and forward markets.

􀂅  Define currency swap rate, forward premium and forward discount.

􀂅  Calculate the forward premium or discount.

􀂅  Define covered-interest arbitrage / interest rate parity.

􀂅  Describe a typical foreign exchange operation.

􀂅  Define front, middle and back office.