The foreign exchange market

Résumé fourni par la source

In this chapter, we discuss at length the foreign exchange (forex) market. We begin with the features of the forex market and then explain the factors (variables) of exchange-rate determination. Specifically, we identify inflation rates, interest rates, income levels and government policies, among other determinants. Next, we present some important economic international parities that are essential in understanding how exchange rates move. To that end, we present the interest rate parity, the purchasing power parity and the international Fisher effect. We illustrate some of these parities via real-data examples and interpret the findings. In addition, we present some important forex strategies carry trade and speculating/hedging with options and futures and continue with some other arbitrage strategies such as locational, triangular, and the covered interest arbitrage and the uncovered interest rate parity. We end the chapter with the discussion on exchange-rate forecasting by illustrating forecasting techniques such as fundamental and technical forecasting methods.

Ce résumé expose les affirmations des auteurs. BNTIC ne l’interprète pas comme une validation indépendante des résultats.