Delve into the fascinating world of Foreign Exchange Markets and Currency Derivatives as you learn the theories and practices that govern foreign exchange. 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.
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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 economics and finance course will unravel those complexities and help you gain a comprehensive understanding of foreign exchange markets: the underlying theories, the instruments traded and how the associated risks and potential adverse outcome are addressed/redressed using several techniques such as currency derivatives.
What you'll learn
- Theories governing foreign exchange:
Interest rate parity
Purchasing power parity
Nominal vs real exchange rates, etc.
- Types of transactions in the foreign exchange markets
- How are exchange rates quoted and traded?
- Participants in the foreign exchange market
- Why and how do Central Banks intervene in the foreign exchange markets?
- Nature and types of foreign exchange risks
Transaction Exposure
Operating Exposure
Transaction Exposure
- How are foreign exchange risks identified and managed?
- Role of ‘currency derivatives’ in the foreign exchange markets, both for speculation and for hedging:
Currency Futures
Current Options
Currency Swaps
Prerequisites
- Learners should have gained, either through formal education or work experience, a good understanding of the concepts and theories underlying Banking and Financial Markets such as ‘time value of money’, ‘theory and structure of interest rates’, ‘structure and functioning of financial markets’ etc.
- A good understanding of probability and statistics, covering measurement of central tendencies (mean, median, mode and standard deviation), probability and distribution, correlation and regression, etc. will significantly augment the learning.
- Participants who have successfully completed the following courses offered by us over the last few months titled ‘Introduction to Banking and Financial Markets Part –I’ and “Banking and Financial Markets: A Risk Management Perspective” might see some similarity and hence find the course easier to follow.
