The Foreign ExchangeMarketChapter Three
I:Foreign Exchange Foreign exchange is a kind of asset denominated by foreigncurrencies. The repayment of foreign exchange should have reliablematerial guarantee and should be generally recognized andaccepted by other countriesForeign exchange must be fully convertiblereferstoallassetsdenominatedbyBroadSenseforeigncurrenciesdenominatedbyforeigncurrenciescanbeusedasmeansofpaymentNarrowSenseforinternationalsettlement
I: Foreign Exchange ❖ Foreign exchange is a kind of asset denominated by foreign currencies. ❖ The repayment of foreign exchange should have reliable material guarantee and should be generally recognized and accepted by other countries. ❖ Foreign exchange must be fully convertible. Broad Sense refers to all assets denominated by foreign currencies Narrow Sense denominated by foreign currencies, can be used as means of payment for international settlement
I:ForeignExchangeSpecificScopeAccording to the Regulation on the Foreign ExchangeSystem of the People's Republic of China, the followingforeign exchange can be used as means of payment and assetfor international settlement:Foreigncurrency Payment instrument denominated in foreign currency Securities denominated in foreign currencySpecial drawing rightOther assets denominated in foreign currency
I:Foreign Exchange ❖Specific Scope According to the Regulation on the Foreign Exchange System of the People’s Republic of China, the following foreign exchange can be used as means of payment and asset for international settlement: ❖ Foreign currency ❖ Payment instrument denominated in foreign currency ❖ Securities denominated in foreign currency ❖ Special drawing right ❖ Other assets denominated in foreign currency
II: Exchange RateQuotationDirect QuotationIndirectQuotationDefinitionThe price of foreign currency inThe price ofdomesticcurrencyterms of domestic currencyinterms of foreign currencyRateForeigncurrencyappreciation,Foreigncurrencydepreciation,domesticcurrencydepreciationdomesticcurrencyappreciationRateForeign currencydepreciation,Foreign currencyappreciation,domesticcurrencyappreciationdomesticcurrencydepreciationtoRMB,itisdirectquotation;to USD,itisindirect quotation$ 1=￥6.2183
II: Exchange Rate ＄1=￥6.2183 Quotation Direct Quotation Indirect Quotation Definition The price of foreign currency in terms of domestic currency The price of domestic currency in terms of foreign currency Rate Foreign currency appreciation, domestic currency depreciation Foreign currency depreciation, domestic currency appreciation Rate Foreign currency depreciation, domestic currency appreciation Foreign currency appreciation, domestic currency depreciation to RMB, it is direct quotation; to USD, it is indirect quotation
II:ExchangeRateClassification offoreign exchangeAccording to certain standards, the foreign exchange can be dividedinto:FromthebankBuyingrateandsellingrateSpotERandforward ERFrom thedeliverytimeFromthedevelopmentofERBasicrateandcrossrateFromdifferentdemandsNominalERandreal ER
II: Exchange Rate ❖ Classification of foreign exchange According to certain standards, the foreign exchange can be divided into: From the bank From the delivery time From the development of ER From different demands Buying rate and selling rate Spot ER and forward ER Basic rate and cross rate Nominal ER and real ER