1.

Role of foreign exchange market

The foreign exchange market (Forex or FX) plays a crucial role in the
development of an economy. Here are several ways it contributes:

1. Facilitating International Trade and Investment:

 The Forex market enables the exchange of different

currencies, which is essential for international trade and
investment. Businesses can buy raw materials, goods, and
services from other countries, and investors can invest in
foreign assets.

2. Determining Exchange Rates:

 Exchange rates in the Forex market are determined by supply

and demand factors. These rates influence trade balances,
with competitive exchange rates boosting exports by making
goods cheaper for foreign buyers.

3. Providing Liquidity:

 The Forex market is the most liquid market globally, ensuring

that currencies can be easily converted without significant
price fluctuations. This liquidity is vital for businesses and
investors who need to exchange currencies.

4. Enabling Hedging and Speculation:

 Businesses and investors can use the Forex market to hedge

against potential losses from currency fluctuations.
Speculators also provide liquidity and can influence currency
values through their trading activities.

5. Supporting Monetary Policy:

 Central banks use the Forex market to implement monetary

policy. By intervening in the Forex market, they can stabilize
or devalue their currency to control inflation and stimulate
economic growth.

6. Attracting Foreign Direct Investment (FDI):

 A stable and efficient Forex market attracts FDI, as investors

prefer to invest in countries where they can easily convert
their earnings into their home currency without significant
risk.

7. Influencing Inflation and Interest Rates:

  Exchange rates impact the price of imported goods and
services, affecting inflation. Central banks may adjust interest
rates in response to currency movements to maintain
economic stability.

8. Enhancing Economic Integration:

 The Forex market fosters economic integration by enabling

capital flow between countries. This integration can lead to
more efficient resource allocation and access to a broader
range of goods and services.

Conclusion

The Forex market is integral to the global economy, providing the

mechanisms for currency exchange, influencing economic stability, and
fostering international trade and investment. Its efficient functioning is
essential for economic growth and development.

2. Impact of foreign exchange rates on import and export

activities

Foreign exchange rates significantly impact import and export activities.

Impact on Exports:

1. Currency Depreciation:

 When a country's currency depreciates (loses value) relative

to other currencies, its goods and services become cheaper
for foreign buyers. This can boost exports as foreign
consumers and businesses find the cheaper prices more
attractive.

 For example, if the Vietnamese Dong depreciates against the

US Dollar, Vietnamese products become cheaper for American
buyers, potentially increasing Vietnamese exports to the US.

2. Currency Appreciation:

 Conversely, if a country’s currency appreciates (gains value),

its exports become more expensive for foreign buyers. This
can reduce demand for the country's goods and services
abroad.

 Using the same example, if the Vietnamese Dong appreciates

against the US Dollar, Vietnamese products become more
 expensive for American buyers, potentially decreasing
exports.

Impact on Imports:

1. Currency Depreciation:

 When a country’s currency depreciates, the cost of imported

goods and services rises because more of the domestic
currency is needed to purchase the same amount of foreign
goods.

 For instance, if the Vietnamese Dong depreciates against the

US Dollar, imported goods from the US become more
expensive for Vietnamese consumers and businesses, leading
to a potential decrease in imports.

2. Currency Appreciation:

 If a country’s currency appreciates, imported goods and

services become cheaper because less of the domestic
currency is needed to purchase the same amount of foreign
goods.

 In this scenario, if the Vietnamese Dong appreciates against

the US Dollar, imported goods from the US become cheaper
for Vietnamese consumers and businesses, potentially
increasing imports.

Additional Effects:

1. Trade Balance:

 The trade balance (difference between exports and imports) is

directly influenced by exchange rates. A weaker currency can
improve a country's trade balance by increasing exports and
reducing imports, while a stronger currency can have the
opposite effect.

2. Competitiveness:

 Exchange rate fluctuations affect the international

competitiveness of a country’s goods and services. A stable
and favorable exchange rate can help maintain a competitive
edge in global markets.
 3. Cost of Production:

 For businesses that rely on imported raw materials, exchange

rate depreciation increases production costs, which can be
passed on to consumers in the form of higher prices.
Conversely, currency appreciation can lower production costs.

4. Foreign Exchange Risk:

 Businesses engaged in international trade face foreign

exchange risk due to fluctuating exchange rates. Companies
may use hedging strategies to mitigate this risk, such as
forward contracts or options.

Conclusion:

 Depreciation: Boosts exports (cheaper for foreign buyers), reduces

imports (more expensive for domestic buyers).

 Appreciation: Reduces exports (more expensive for foreign

buyers), increases imports (cheaper for domestic buyers).

Conclusion:

Understanding and managing the impact of foreign exchange rates is

crucial for businesses involved in international trade, as it affects pricing,
competitiveness, and profitability.

3. Factors affect exchange rate

Exchange rates are influenced by a variety of factors, both economic and
political. Here are the key factors that affect exchange rates:
1. Interest Rates:
 Higher Interest Rates: When a country’s central bank raises interest
rates, it often attracts foreign capital seeking higher returns. This
increases demand for the country’s currency, leading to
appreciation.
 Lower Interest Rates: Conversely, lower interest rates can lead to
capital outflows and depreciation of the currency.
2. Inflation Rates:
 Lower Inflation: Countries with lower inflation rates tend to see their
currency appreciate as their purchasing power increases relative to
other currencies.
 Higher Inflation: High inflation erodes the value of a currency,
leading to depreciation.
3. Economic Indicators:
 GDP Growth: Strong economic growth attracts foreign investment,
increasing demand for the currency and leading to appreciation.
  Trade Balance: A surplus (more exports than imports) increases
demand for the currency, causing appreciation, while a deficit (more
imports than exports) leads to depreciation.
4. Political Stability and Performance:
 Stable Political Environment: Countries with stable governments and
low political risk tend to attract foreign investment, appreciating
their currency.
 Political Instability: Political turmoil or uncertainty can lead to capital
flight, depreciating the currency.
5. Market Speculation:
 Expectations: If investors believe a currency will strengthen in the
future, they will buy it now, causing the currency to appreciate.
 Panic Selling: Conversely, if they believe the currency will weaken,
they will sell it, causing depreciation.
6. Foreign Exchange Reserves:
 High Reserves: Countries with substantial foreign exchange reserves
can stabilize their currency, leading to appreciation.
 Low Reserves: Limited reserves can result in less intervention
capability, potentially leading to depreciation.
7. Government Debt:
 Low Debt Levels: Countries with lower public debt are more
attractive to foreign investors, leading to currency appreciation.
 High Debt Levels: High levels of debt may deter foreign investment
and lead to depreciation due to concerns over a country’s ability to
repay.
8. Terms of Trade:
 Improved Terms of Trade: When the price of a country’s exports rises
relative to its imports, its currency tends to appreciate.
 Deteriorated Terms of Trade: If export prices fall relative to import
prices, the currency may depreciate.
9. Differential Economic Growth:
 Faster Growth: Economies growing faster than others tend to attract
more foreign investment, appreciating their currency.
 Slower Growth: Economies growing slower may see their currency
depreciate as investors look for better returns elsewhere.
10. Capital Flows:
 Inflow of Capital: Increased foreign investment in a country’s assets
(stocks, bonds, real estate) leads to currency appreciation.
 Outflow of Capital: Capital outflows, where investors pull their
money out of a country, result in currency depreciation.
11. Relative Strength of Other Currencies:
 Global Currency Trends: The strength of major currencies like the US
Dollar, Euro, and Yen can influence other currencies. For instance, a
strong US Dollar might lead to weaker emerging market currencies.
12. Monetary Policy:
 Expansionary Policy: Central banks lowering interest rates or
increasing money supply can lead to currency depreciation.
 Contractionary Policy: Raising interest rates or reducing money
supply can lead to currency appreciation.
Conclusion
Exchange rates are influenced by a complex interplay of factors, including
interest rates, inflation, economic growth, political stability, market
speculation, foreign exchange reserves, government debt, terms of trade,
capital flows, and monetary policy. Understanding these factors helps in
predicting currency movements and making informed decisions in
international trade and investment.
4. The role of International Monetary System in international
trade and finance
The International Monetary System (IMS) plays a vital role in facilitating
international trade and finance by providing a framework for exchanging
currencies, establishing monetary policies, and ensuring economic
stability.
1. Providing Exchange Rate Mechanisms:
 Fixed Exchange Rate System: Historically, systems like the Gold
Standard and Bretton Woods fixed exchange rates to a specific
value, reducing uncertainty in international trade.
 Floating Exchange Rate System: In the current system, exchange
rates are largely determined by market forces, allowing for flexible
adjustments to economic conditions. This system helps countries
absorb shocks and adjust to global economic changes.
2. Promoting Economic Stability:
 Policy Coordination: The IMS encourages coordination among
countries' monetary policies to prevent extreme volatility and
ensure global economic stability. Organizations like the International
Monetary Fund (IMF) play a key role in monitoring and advising on
policy.
 Crisis Management: During financial crises, the IMS provides
mechanisms for international support, such as IMF bailouts, to
stabilize affected economies and prevent the crisis from spreading.
3. Facilitating International Trade:
 Currency Convertibility: The IMS ensures that currencies are easily
convertible, enabling smooth transactions for international trade.
This reduces the risk of currency shortages and exchange rate
volatility.
 Trade Balance Adjustments: The system allows countries to adjust
their trade balances through exchange rate movements, helping
maintain equilibrium in global trade.
4. Supporting Financial Markets:
 Capital Mobility: The IMS supports the free flow of capital across
borders, facilitating investment and financial integration. This allows
for better allocation of resources and diversification of investment
portfolios.
 Standardized Practices: It promotes standardized financial practices
and regulations, enhancing transparency and reducing the risk of
financial fraud and instability.
5. Ensuring Liquidity:
 Global Liquidity Provision: The IMS ensures the availability of global
liquidity to meet the demand for international reserves. The IMF, for
 example, provides short-term financial assistance to countries
facing balance of payments problems.
 Reserve Assets: It defines and manages the use of reserve assets
like Special Drawing Rights (SDRs) and major currencies (USD, EUR,
JPY) to facilitate international transactions and provide liquidity.
6. Regulating Monetary Policies:
 Exchange Rate Regimes: Countries choose different exchange rate
regimes (fixed, floating, pegged, etc.) based on their economic
conditions and policy objectives, guided by the principles of the IMS.
 Monetary Cooperation: The IMS promotes cooperation among
central banks and monetary authorities to align policies and reduce
adverse effects like currency wars and competitive devaluations.
7. Enhancing Confidence:
 Predictability: A stable IMS enhances confidence in the global
financial system by providing predictable and transparent exchange
rate mechanisms and policies.
 Risk Management: It helps countries manage exchange rate risks
through various financial instruments and hedging techniques, thus
encouraging cross-border trade and investment.
8. Supporting Economic Development:
 Development Financing: The IMS supports economic development
by providing financial resources and technical assistance to
developing countries through institutions like the IMF and the World
Bank.
 Reducing Poverty: By promoting stable economic conditions and
supporting sustainable growth, the IMS plays a role in reducing
global poverty and improving living standards.
Conclusion
The International Monetary System is fundamental to international trade
and finance, ensuring stable and predictable exchange rates, promoting
economic stability, facilitating smooth trade and investment flows,
providing global liquidity, and enhancing overall confidence in the global
economy. Through coordination of monetary policies and provision of
financial resources, the IMS helps manage economic crises and supports
long-term economic development.

Bài tập option :

2. Bài tập tài chính quốc tế có lời giải 2: Xác định số CAD phải bán
Một công ty nhập khẩu Canada phải thanh toán khoản tiền nhập khẩu trị
giá 1 triệu USD thời hạn 1 tháng.
Công ty ký hợp đồng mua quyền chọn mua USD/CAD thời hạn 1 tháng với
các điều khoản như sau:
– Giá thực hiện 1,2345 CAD
– Phí quyền 0,02 CAD
Giả sử giá giao ngay sau 1 tháng có thể xảy ra các tình huống như sau:
1. USD/CAD = 1,2821
2. USD/CAD = 1,2345 3. USD/CAD = 1,1904
Hỏi trường hợp nào công ty thực hiện quyền, trường hợp nào để
quyền hết hạn. Xác định số CAD phải bán trong mỗi trường hợp
BÀI GIẢI
 Phí quyền = 1.000.000*0,02=20.000 CAD
– Nếu công ty thực hiện quyền, tổng số CAD công ty phải chi ra (bao gồm
cả phí) là:
1.000.000*1,2345+20.000=1.254.500 CAD
– Trường hợp 1: USD/CAD=1,2821, giá này sẽ áp dụng khi công ty không
thực hiện quyền, khi đó tổng số CAD phải chi ra (bao gồm cả phí) là:
1.000.000*1,2821+20.000=1.302.100 CAD > 1.254.500
=> Trường hợp này công ty thực hiện quyền vào thời điểm đáo hạn và số
CAD chi ra là 1.254.500
– Trường hợp 2: USD/CAD = 1,2345 đúng bằng mức giá thực hiện, do
vậy trong trường hợp này công ty thực hiện hợp đồng hay không như nhau
và tổng số CAD phải chi ra là 1.254.500 CAD
– Trường hợp 3: USD/CAD=1,1904, tổng số CAD phải chi ra (bao gồm cả
phí) là:
1.000.000*1,1904+20.000=1.210.400 CAD <1.254.500
=> Trường hợp này công ty không thực hiện quyền vào thời điểm đáo hạn
và số CAD chi ra là 1.210.400

3. Bài tập tài chính quốc tế có lời giải 3: Xác định số USD phải bán
Một công ty xuất khẩu Mỹ có khoản phải thu trị giá 100.000 GBP thời hạn
1 tháng.
Công ty ký hợp đồng mua quyền chọn bán GBP/USD thời hạn 1 tháng với
các điều khoản như sau:
– Giá thực hiện 1,60 USD
– Phí quyền 0,04 USD
Giả sử giá giao ngay sau 1 tháng có thể xảy ra các tình huống như sau:
1. GBP/USD = 1,58
2. GBP/USD = 1,60
3. GBP/USD = 1,64
Hỏi trường hợp nào công ty thực hiện quyền, trường hợp nào để
quyền hết hạn. Xác định số USD mua được trong mỗi trường hợp
BÀI GIẢI
Phí quyền = 100.000*0,04 = 4.000 USD
– Nếu công ty thực hiện quyền, tổng số USD mua được (sau khi trả phí) là:
100.000*1,60 – 4.000=156.000 USD
– Trường hợp 1: GBP/USD=1,58, giá này sẽ áp dụng khi công ty không
thực hiện quyền, khi đó tổng số USD mua được (sau khi trả phí) là:
100.000*1,58 – 4.000=154.000 USD < 156.000
=>TH này công ty thực hiện quyền vào thời điểm đáo hạn và số USD mua
được là 156.000
– Trường hợp 2: GBP/USD=1,60 đúng bằng mức giá thực hiện, do vậy
trong TH này công ty thực hiện hợp đồng hay không như nhau và tổng số
USD mua được là 156.000USD
– Trường hợp 3: GBP/USD=1,64, tổng số USD mua được (sau khi trả phí)
là:
100.000*1,64 – 4.000=160.000 USD > 156.000
=> Trường hợp này công ty không thực hiện quyền vào thời điểm đáo hạn
và số USD mua được là 160.000 USD.