Financial Skills: Foreign Exchange Markets and Currency Risk Management

Scheduled Dates (sort by: location | date)

Course Overview

Once again the FX market show tremendous growth in volume and complexity and hedging currency risk is more important then ever. This programme will explore and explain the FX markets from both the sell side (banks) and buy side (corporate and asset managers) perspective.

New market initiatives such as e-FX and CLS will be introduced, and all terminology and jargon will be fully explained.

Course Outline

WHAT IS CURRENCY RISK AND HOW DOES IT ARISE?

• Examples of currency risk in major organisations
• Effect of corporate culture: cost centre/profit centre
• Objectives - hedging vs trading
• Need for a treasury policy
• Examples -FX mismanagement (bank, corporate and asset management horror stories)

MARKET BACKGROUND

• History
• Volumes
• Sector growth
• Why FX rates move
• Market influences - short term vs long term effects

SPOT FOREIGN EXCHANGE

• Definition and key features
• Understanding value dates and different time zones
• Currency classifications - major, minor, crosses
• Understanding bid-offer prices

FORWARD FOREIGN EXCHANGE

• Definition and key features
• Understanding forward rates
• Premiums and discounts
• Outright forward transactions
• Case study -pricing, spot and forward transactions

OVERVIEW OF CURRENCY OPTIONS

• Definition and key features
• When to use options and when to use forward contracts
• First principles of option pricing
• Examples and applications

MANAGING CURRENCY RISK

• Transaction, trading, competitive, translation,
• Exposure management process
• Practical aspects of a hedging policy
• Strategic vs dynamic hedging
• Getting the best rates from your bankers

NEW MARKET DEVELOPMENTS

• e-FX -single and multi-bank portals

• Continuous linked settlement (CLS)

Financial Skills: Foreign Exchange Markets and Currency Risk Management / CM029431