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1、商务英语阅读,作者：李树红,责任编辑：张 琛 出版日期：2009年9月 IDPN：308-2009-159 课件章数：16,Unit 14 Foreign Exchange,Background Information Key to exercises,Foreign Exchange,Foreign Exchanged Defined:,Different countries use different currencies. Purchase or sale of one national currency in exchange for another nations currency.
2、 Currency and money claims, such as bank balances and bank drafts, which is expressed in the equivalent value in foreign money. Foreign exchange makes international transaction possible, such as imports and exports and the movement of capital between countries.,Foreign Exchange,Dealings of Foreign E
3、xchange :,Place and time for currencies being traded:,Currencies are traded world wide among the major financial centers of London, New York, Tokyo, Frankfurt, Hong Kong, Singapore, Paris and Sydney Spanning most time zones. Foreign market is open 24 hours a day, five days a week.,Foreign exchange p
4、articipations:,The Overall foreign market in the world with an average traded value exceeds $1.9 trillion per day.,The foreign exchange is the largest market in the world in terms of the total cash traded. Any person, firm or country may participate in this market.,Negotiable bills drawn in one coun
5、try can be paid in another country.,Foreign Exchange,Interpreting Foreign Exchange:,To interpret foreign exchange requires making inferences based on its business. Typical foreign exchange business:,The arising of the use of foreign exchange Exchange rate Price Fluctuation How banks get foreign exch
6、ange,Foreign Exchange,Interpreting Foreign Exchange:,The arising of the use of foreign exchange - Different nations have different monetary units. - Transactions between different countries happen every day. - The currency of one country cannot be used for making payments in another country. - Conve
7、rting money into the currency of other countries becomes necessary to make transactions go on.,Foreign Exchange,Interpreting Foreign Exchange:,Exchange Rate,- The price of one currency in terms of another is called rate of exchange or exchange rate. - A foreign exchange rate is a price and, like mos
8、t prices, is determined by the interaction of supply and demand. - The use of foreign exchange solves the difficulties arising between different nations transactions with different currencies.,Rates for exchange instruments,The rate for T/T The rate for M/T Sight drafts ( D/D) The rate for 30-day bi
9、lls (D/D), etc,Foreign Exchange,Interpreting Foreign Exchange:,Exchange Rate,Fixed and floating exchange-rate system - Under fixed exchange-rate system, the rate between one currency and another is fixed and maintained by the government. - By floating or flexible exchange rates, we mean currency pri
10、ces are determined by the market forces. Quotation methods of exchange rates,Direct quotation method Indirect quotation method US dollar quotation method,Foreign Exchange,Interpreting Foreign Exchange:,Exchange Rate,Impacts of exchange-rate on trade,Exchange-rate changes have a direct impact on trad
11、e, and balance- of-payments positions of a country. So governments and central banks intervene when a countrys exchange rate is too high or too low. Example: About 7 years ago, due to its low exchange rate against the dollar, Japan enjoyed a bit trade surplus with the United States and was forced by
12、 the American government to adjust upwards yens exchange rate against the US dollar to correct its bilateral trade imbalance.,Foreign Exchange,Interpreting Foreign Exchange:,Price Fluctuation,Supply and demand,“Teach a parrot to say demand and supply and youll have an economist”. It does contain a g
13、rain of truth. It is the interaction of the economic forces of supply and demand that determines the price for goods and service. When a relative shortage of the currency of a country occurs, the money in short supply will sell at a higher price in terms of the money of other nations. Similarly, if
14、the businesses of a country, their imports are greater than their exports, foreigners will hold more deposits of that countrys money than they want to hold. As a result, they will be forced by the large supply to sell that currency on the world market at a lower price in terms of other currencies. S
15、upply and demand of a foreign currency are the main factors causing the fluctuation of the rate of exchange between one currency and other currencies.,Foreign Exchange,Interpreting Foreign Exchange:,Price Fluctuation,Shifts in supply and demand caused by:,Trading. Investment. Speculation (At times,
16、speculation in foreign exchange by dealers, brokers, or others becomes a major influence on exchange rates).,Government control,The government has the alternative of allowing freedom of transaction in foreign exchange and permitting its currency to depreciate, or of abandoning free transfer of currency by the establishment of exchange control. The aim of such control is to limit the demand for and to increase the supply of foreign exchange in order to maintain a stable exch
