Chapter 13 Exchange Rates and the Foreign Exchange Market: An Asset Approach
Chapter 13 ▪ Exchange Rates and the Foreign Exchange Market:An Asset Approach
Chapter organization Introduction Exchange Rates and International Transactions The Foreign Exchange Market The Demand for Foreign Currency Assets Equilibrium in the Foreign Exchange Market Interest Rates, Expectations, and equilibrium Summary Copyright C 2003 Pearson Education, Inc Slide 13-2
Copyright © 2003 Pearson Education, Inc. Slide 13-2 ▪ Introduction ▪ Exchange Rates and International Transactions ▪ The Foreign Exchange Market ▪ The Demand for Foreign Currency Assets ▪ Equilibrium in the Foreign Exchange Market ▪ Interest Rates, Expectations, and Equilibrium ▪ Summary Chapter Organization
Introduction Exchange rates are important because they enable us to translate different counties' prices into comparable terms a Exchange rates are determined in the same way as other asset prices a The general goal of this chapter is to show How exchange rates are determined The role of exchange rates in international trade Copyright C 2003 Pearson Education, Inc Slide 13-3
Copyright © 2003 Pearson Education, Inc. Slide 13-3 Introduction ▪ Exchange rates are important because they enable us to translate different counties’ prices into comparable terms. ▪ Exchange rates are determined in the same way as other asset prices. ▪ The general goal of this chapter is to show: • How exchange rates are determined • The role of exchange rates in international trade
Exchange Rates and International Transactions An exchange rate can be quoted in two ways Direct The price of the foreign currency in terms of dollars Indirect The price of dollars in terms of the foreign currency Copyright C 2003 Pearson Education, Inc Slide 13-4
Copyright © 2003 Pearson Education, Inc. Slide 13-4 Exchange Rates and International Transactions ▪ An exchange rate can be quoted in two ways: • Direct – The price of the foreign currency in terms of dollars • Indirect – The price of dollars in terms of the foreign currency
Exchange Rates and International Transactions Table 13-1: Exchange Rate Quotations CURRENCY TRADING EXCHANGGE RATE CY PER U. S 22212 9225 ao13o1313255 瑞 1 cs""s."器rR"e,"asa changer raters bsUXIUC'VII Lapre LGeGLAGq Mol]qMIqG DOM TOUG2'IUCAIs cobALIEpr CIGSLSUCG CGUIGL' IUC'OSOOI DOM TOUGe SUq COUJ- 20nLGG: LPG MSII 2LGGr onLus]'OcrOpGL s?' soon KcbnpjepGq pA bGLII221OU OL Copyright C 2003 Pearson Education, Inc Slide 13-5
Copyright © 2003 Pearson Education, Inc. Slide 13-5 Exchange Rates and International Transactions Table 13-1: Exchange Rate Quotations