Foreign Exchange and Money Markets: Theory, Practice and Risk Management

Floating rates, central-bank intervention, derivatives trading and the very high volumes of speculative and round-the-clock trading are just a few of the facets of the foreign exchange marketplace that make it a highly dynamic and volatile arena. This book addresses the practical applications of foreign currency trading and money market trading and provides comprehensive coverage of these markets. Coverage includes:

What the instruments areHow and why they are used - by both bank dealers and corporate end-usersHow the different instruments are linked one to anotherHow you price themStructure of the market, EMU etcThe range of risks arising from dealings in these instruments that affect banks and corporatesHow these risks are measured and managed

Brings together a range of practical, relevant material on Foreign Exchange and money market tradingFocuses on trading situations as well as on calculationsInternational in coverage, the concepts and methods covered are not restricted to any country or institution

Some basic concepts
Essential financial arithmetic
Overview of money market instruments
Deposits and coupon-bearing instruments
Discount instruments
Forward interest rates, FRAs and introduction to futures
Spot foreign exchange; Forward outrights and swaps
Hedging swaps with deposits, FRAs and futures, covered interest arbitrage and creating synthetic FRAs
Managing the spot risk on a forward FX position
Currency relationships
Bank risk management
Corporate risk management
Answers to the exercises