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Foreign Exchange Market: An Introduction

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Language:  English
In this book all aspects of the forex market are covered: organisational structure, cross rates, spreads, quotation conventions, role and other relevant issues.
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It is an understatement to say that the forex markets of the world are immense. The high level of turnover indicates that the forex market is an efficient market, ie price discovery is sound. It is a quote-driven market (as opposed to an order-driven market) and it is firmly the banks’ province. They quote bid and offer rates simultaneously once the volume of the transaction is disclosed, and the quote recipient can deal either side of the quote. As in the spot forex market, the derivative forex market is efficient, allowing, for example, a company to do a large forward deal as quickly as a spot deal. The company can also do currency swaps, forward-forwards, option date forwards, and more, at the drop of a hat. In this book all aspects of the forex market are covered: organisational structure, cross rates, spreads, quotation conventions, role and importance of exchange rates, participants, relationship with the balance of payments and the money stock, and other relevant issues.

  1. Essence
    1. Learning objectives
    2. The foreign exchange market in a nutshell
    3. Organisational structure of the forex market
    4. Monetary unit
    5. Foreign exchange and bank deposits
    6. International spot rate quotation conventions
    7. Two-way spot prices
    8. Spread
    9. Cross rates
    10. Foreign exchange risk: appreciation and depreciation
    11. Spot and derivative forex markets
    12. Why exchange rates are important
    13. Summary
    14. Bibliography
  2. Derivatives: forwards
    1. Learning objectives
    2. Introduction
    3. Derivatives markets
    4. Definition of a forward
    5. Types of forwards
    6. Outright forward foreign exchange contracts: functions and pricing
    7. Forward exchange market
    8. Summary
    9. Bibliography
  3. Derivatives: futures, options & swaps
    1. Learning objectives
    2. Introduction
    3. Currency futures
    4. Currency options
    5. Currency swaps
    6. Summary
    7. Bibliography
  4. Risks other than currency risk & other risk management tools
    1. Learning objectives
    2. Introduction
    3. Risks other than currency risk in investments
    4. Other risk mangement tools
    5. Summary
    6. Bibliography
  5. Participants
    1. Learning objectives
    2. Introduction
    3. Authorised dealer banks
    4. Foreign exchange brokers
    5. Foreign banks
    6. Central bank
    7. Government
    8. Retail clients
    9. Non-bank authorised dealers
    10. Corporate sector
    11. Arbitrageurs
    12. Speculators
    13. Summary
    14. Bibliography
  6. Effect on money stock & money market liquidity
    1. Learning objectives
    2. Introduction
    3. Money identity
    4. Money market identity
    5. Purchases and sales of forex, M and the liquidity shortage
    6. Forward market operations of the central bank
    7. Forex swaps by the central bank
    8. Summary
  7. Endnotes
A very useful introductory guide to the subject that provides a foundation quite unlike many. A simple step by step guide dealing with complex issues in plain terms.
Really enjoy the layout. It's structured and understandable.
About the Author
Prof.

Prof. Dr AP Faure

Alexander Pierre Faure graduated from Elsenburg Agricultural College after school and went on to Stellenbosch University where he graduated with BA (Commerce), Hons BA (Economics), MA (Economics), and PhD (Economics).

He also successfully completed the Stockbroker Examination Requirements at Witwatersrand University (and is a registered Stockbroker - presently non-broking status).

He first worked for the central bank, where he was involved in compiling the monetary statistics (money stock and sources of change, and money market liquidity analysis) and later in the execution of monetary policy.

His career after central banking included private sector banking (the recipient of monetary policy), stockbroking (influenced by monetary policy) and interest rate analysis (reading monetary policy).

After his private sector experience, he became an academic and held the positions Investec Chair in Money and Banking (at Rhodes University and the University of Fort Hare) and Foord Chair in Investments (at Rhodes University).

After retirement he was appointed Professor Emeritus at Rhodes University, and remains engaged in research.  

He has published widely, including books and papers.

He also served on a number of boards of directors, holding the positions of Non-executive Director and Managing Director.