Money Markets & Foreign Exchange

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An Introduction to Money Markets & Foreign Exchange, (One Day)

This workshop will explain how money market & foreign exchange products work and what they are used for. The course will cover the following:

The role of Treasury in managing FX and liquidity risk
Money market instruments, the main products and why they are used
Foreign exchange, spot, forward, swap and option transactions, how they work and what they are used for

There will be a mixture of presentation and case study material.

The workshop is designed for up to ten staff who are new, or have limited exposure to financial markets and wish to build on their understanding of financial instruments.

Below is a summary of the workshop content. The content of the day has been placed in a logical sequence and addresses the main products, pricing, and application.

Morning

Interest rates & discount factors

Market terminology

Selected market terminology and what it means

The Treasury

Explanation of the role of the treasury
The main risks that are managed

Basic financial mathematics

Discount factors, present / future value

Money market instruments

Money markets

Loans and deposits
Certificates of deposit
Commercial paper
Asset backed commercial paper
Treasury bills
Repo
Funding & liquidity

Interest rate exposure

What it is
How it is quantified
How it affects customers

Hedging short term interest rate exposure

Forward rate agreements
Hedging application
Futures
Use in hedging by financial institutions

Afternoon

Foreign exchange

Foreign exchange

Identifying & quantifying FX exposure
How & why customers get FX risk
Hedging policies
Spot exchange rates
Forward rates & their calculation
How customers can use forward transactions
Agreeing outright forward prices
FX swaps
How FX swaps can be used

Currency swaps

Fixed / fixed
Fixed / floating
Basis swaps
Practical application

Currency options

Option terminology
How FX options work
Simple option strategies for customers
Zero cost and reduced premium strategies

End of workshop & review

Related Documents

Short courses>Foreign exchange & Non deliverable forwards

Treasury Consulting > Corporate foreign exchange risk

6th December 2009

Unexpected gains and losses from foreign exchange risk can complicate running a company. At the moment you may be selling off currency on an ad-hoc basis and it's the first time you have considered managing the exposure what can you do? Here are 11 points that may help.

elearning > Spot & forward foreign exchange

Learn about the following: How the spot market works. What the spot price is. What happens when you do a deal. How the forward rate is calculated. How dealers make money. Why customers are important.

Market Guides > Spot & forward foreign exchange

12th October 2009

Introduction Foreign exchange is defined as "a claim to a foreign currency payable abroad and may be funds held, bills or cheques". A foreign exchange transaction is, "a contract agreed today between two parties to trade an agreed amount of one currency for an agreed amount of another currency on a future date". When you travel you may be familiar with buying currency at the airport. Because the sums involved are small and paper money is exchanged the differences between buying and selling prices can be wide. You may also be unfortunate enough to pay a dealing fee. Banks, corporates and speculators deal in the professional market. Trades are transacted across electronic platforms and each trade can run into millions of dollars. As a consequence dealing spreads are very narrow and the money is exchanged by credits and debits to bank accounts. Let's find out about the spot and forward markets and the risks involved.