金融英语课件7

1、Chapter 7Macroeconomics of International CurrenciesThe teaching purpose of this chapterBy the end of the chapter, students should be able to know about:how international currencies originatedwhy there lacks currency substitutionthe Bretton Woods systeminternational monetary systemCopyright 2010 Pear

2、son Education, Inc. Publishing as Prentice Hall2Different stages of International Monetary System1）Gold Standard (Mid 1870s Early 1930s)Concept: monetary system in which the standard economic unit of account is a fixed weight of gold.CharacteristicsNational currency defined in terms of gold;Central

3、bank ready to buy and sell gold;Gold freely coined and formed;Gold can be exported and imported;Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall3Gold Standard EraGreat Britain; Germany; USABenefitsFree flows of labor, capital and goods;Rapid economic growth;Stable prices and exchan

4、ge rates.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall42）Gold Exchange Standard (19441973)July,1944-delegates from 44 Allied Powers attended UNMFCConcept: US dollar pegged （钉住）to gold and other currencies pegged to US dollar Gold fixed at US $35 per ounce Exchange rate fluctuati

5、on（波动，起伏）:1%Collapse due to : Worldwide inflation Oil crisisCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall5In the early 1970s, the demise of the Bretton Woods system resulted in fundamental changes in the way international monetary system worked. Most important among these change

6、s was that the supply and the composition of international liquidity became endogenously determined and the international monetary system departed from a commodity System.fundamental= primary / essentialthe demise （死亡，终结，结束）of the Bretton Woods agreement = the termination/ break down of the Bretton

7、Woods agreementCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall63）Free-Floating Exchange Rate System(19731985)Free-Floating Exchange RateSignificant Events1979: European Monetary System, created to promote exchange rate stability in EEC.1982: Mexico defaulted （拖欠，未履行）on US $1000 bi

8、llion of foreign debtsUS pursued expansive monetary policyresults: High value of US dollar against other currenciesPlaza AgreementSeptember 1985, Plaza Agreement signed by G5.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall74）Managed Float System(1985present)Also called “dirty floa

9、t”Concept: governments primarily allow market forces to determine exchange rates but regularly intervene in foreign exchange marketsCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall8The international monetary system is the framework within which countries borrow, lend, buy, sell and

10、 make payments across political borders. So far the world has gone through the following types of monetary system:a) The gold standardb) The gold exchange standardc) The flexible exchange rate systemd) The managed floatCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall9The foreign ex

11、change market is a place where currencies are bought and sold. The interbank market is an informal, over-the-counter, around the clock market including major commercial banks and some specialized brokers. The market is linked by telephone, fax, and the Internet, and the settlement of transactions is

12、 done via SWIFT.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall10Interpretation of the conceptFiat system 法币法币/不兑换纸币不兑换纸币a monetary system in which the value of money (usually paper money) is determined by a governments fiat or decree.Copyright 2010 Pearson Education, Inc. Publish

13、ing as Prentice Hall11Commodity standard 商品本位制商品本位制a monetary system in which the value of money is based on a physical commodity such as gold or silver.gold standard 金本位制金本位制A monetary system that currency with a reserve of gold, and allows currency holders to convert their currency into gold. The

14、U.S. went off the gold standard in 1971.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall12Deregulated financial market 取消管制取消管制/自由化自由化的金融市场的金融市场financial markets where legal restrictions imposed by the government are lifted（撤销，解除）Copyright 2010 Pearson Education, Inc. Publishing as

15、 Prentice Hall13Capital flow 资本流动资本流动capital control 资本管制资本管制Par value 平价平价/面值面值also called nominal value or face value; the stated value of a currency representing how much the holder is to be paid.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall14Freely floating exchange rate自由浮动

16、汇率自由浮动汇率the rate which is allowed to adjust freely to the supply and demand of one currency for another.Portfolio 投资组合投资组合combined holdings of assets by an individual or institution, e.g.: bonds, preferred stocks, common stocks or other asset, with the purpose of reducing risk by diversification.Cop

17、yright 2010 Pearson Education, Inc. Publishing as Prentice Hall15Balance of payments 国际收支国际收支 The difference between a nations total payments to, and receipts from, foreign nations during a specific periodtrade surplus 贸易顺差贸易顺差 A positive balance of trade, i.e. exports exceed importsCopyright 2010 P

18、earson Education, Inc. Publishing as Prentice Hall16Triffin Dilemma 特里芬难题特里芬难题the conflict between the necessity for the US to provide liquidity for conversion（变换，转化）of gold into US dollars by running balance of payments current account deficit and the need to maintain confidence in US dollar by run

19、ning a balance of payments current account surplus.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall17Louvre Accord 卢浮宫协议卢浮宫协议a meeting of G7 nations in February at Louvre in France to announce that the dollar had fallen to a level consistent (协调，一致)with “economic fundamentals” and

20、that central banks would intervene in FX markets only to ensure stability of exchange rate.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall18The Basics of Foreign Exchange MarketThe trading of currencies takes place in foreign exchange markets whose major function is to facilitate

21、international trade and investment. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall19Spot, forward, bid, ask pricesThere is an almost bewildering variety of foreign exchange markets abound in a number of currencies. In addition, there are diverse prices for these currencies. Virtu

22、ally every major newspaper, such as THE WALL STREET JOURNAL or THE LONDON FINANCIAL TIMES, prints a daily list of exchange rates. These are expressed either as the number of units of a particular currency that exchange for one U. S. dollar or as the number of U. S. dollars that exchange for one unit

23、 of a particular currency. Sometimes both are listed side by side.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall20For major currencies，up to four different prices typically will be quoted. One is the spot price. The others may be 30 days forward, 90 days forward, and 180 days for

24、ward. These may be expressed either in European terms (such as the number of U. S. dollar per British Pound sterling) or in American terms (such as number of British Pound sterling per U. S. dollar). Spot price: 即期价格即期价格Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall21The spot pri

25、ce is what you must pay to buy currencies for immediate delivery (two working days in the interbank market; over the counter, if you buy bank notes or travelers checks). The forward prices for each currency are what you will have to pay if you sign a contract today to buy that currency on a specific

26、 future date (30 days from now, and so on). In this market, you pay for the currency when the contract matures.forward prices: 远期价格Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall22Why would anyone buy and sell foreign currency forward? There are some major advantages from having s

27、uch opportunities available. For example, an exporter who has receipts of foreign currency due at some future date can sell those funds forward now, thereby avoiding all risks associated with subsequent adverse exchange-rate changes. Similarly, an importer who will have to pay for a shipment of good

28、s in foreign currency in, say, three months can buy the foreign exchange forward and , again, avoid having to bear the exchange-rate risk.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall23The exchange rates quoted in the financial press are not the ones individuals would get at a l

29、ocal bank. Unless otherwise specified, the published prices refer to those quoted by banks to other banks for currency deals in excess of $1 million. Even these prices will vary somewhat depending upon whether the bank buys or sells. The difference between the buying and selling price is known as th

30、e “bid/ask spread”. The spread partly reflects the banks costs and profit margins in transactions; however, major banks make their profits more from capital gains than from the spread.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall24The market for bank notes and the travelers chec

31、ks is quite separate from the interbank foreign exchange market. For smaller currency exchanges, such as an individual going on vocation abroad might make, the spread is greater than in the interbank market. This presumably reflects the larger average cost. As a result, individuals generally pay a h

32、igher price for foreign exchange than those quoted in the newspapers.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall25Exchange Rate DeterminationLaw of One PriceThe starting point for understanding how exchange rates are determined is a simple idea called the law of one price: If

33、two countries produce identical goods, the price of the goods should be the same throughout the world no matter which country produces it. law of one price:一价定律Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall27Suppose that American steel costs $100 per ton and identical Japanese st

34、eel costs 10 000 yen per ton. The law of one price suggests that the exchange rate between the yen and the dollar must be 100 yen per dollar ( $0.01 per yen) in order for one ton of American steel to sell for 10 000 yen in Japan (the price of Japanese steel) and one ton of Japanese steel to sell for

35、 $100 in the United States (the price of U. S. steel).Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall28If the exchange rate were 200 yen to the dollar, Japanese steel would sell for $50 per ton in the United States or half the price of American steel, and American steel would sell

36、 for 20 000 yen per ton in Japan, twice the price of Japanese steel. Because American steel would be more expensive than Japanese steel in both countries and is: identical to Japanese steel, the demand for American steel would go to zero. Given a fixed dollar price for American steel, the resulting

37、excess supply of American steel will be eliminated only if the exchange rate falls to 100 yen per dollar, making the price of American steel and Japanese steel the same in both countries. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall29The Theory of Purchasing Power Parity(PPP)On

38、e of the most prominent theories of how exchange rates are determined is the theory of purchasing power parity (PPP). It states that exchange rates between any two currencies will adjust to reflect changes in the price levels of the two countries. The theory of PPP is simply an application of the la

39、w of one price to national price levels rather than to individual prices. Purchasing Power Parity(PPP): 购买力平价理论(PPP理论)Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall30Suppose that the yen price of Japanese steel rises 10 percent (to 11 000 yen) relative to the dollar price of Amer

40、ican steel (unchanged at $100). For the law of one price td hold, the exchange rate must rise to 110 yen to the dollar, a 10 percent appreciation of the dollar. Applying the law of one price to the price levels in the two countries produces the theory of purchasing power parity, which maintains that

41、 if the Japanese price level rises 10 percent relative to the U. S. price level, the dollar will appreciate by 10 percent.Appreciate:升值;The dollar will appreciate by 10 percent. 美元将升值10。美元升值10: a 10 percent appreciation of the dollar.美元贬值10: a 10 percent depreciation of the dollar.Copyright 2010 Pea

42、rson Education, Inc. Publishing as Prentice Hall31The Factors to Affect the Exchange Rate in the Long RunOur analysis indicates that relative price levels and additional factors affect the exchange rate. In the long run, there are four major ones: relative price levels, tariffs and quotas, preferenc

43、es for domestic versus foreign goods,: and productivity. relative price levels: 相对价格水平tariffs and quotas:关税和配额preferences for domestic versus foreign goods: 对本国商品相对于外国商品的偏好Productivity: 生产率Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall32The basic reasoning proceeds along the foll

44、owing lines: Anything that increases the demand for domestic goods relative to foreign goods tends to appreciate the domestic currency because domestic goods will continue to sell well even when the value of the domestic currency is higher. Similarly, anything that increases the demand for foreign g

45、oods relative to domestic goods tends to depreciate the domestic currency because domestic goods will continue to sell well only if the value of the domestic currency is lower. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall33Summary：In the long run, a rise in a countrys price lev

46、el (relative to the foreign price level) causes its currency to depreciate, and a fall in the countrys relative price level causes its currency to appreciate.长期里，一国价格水平相对于外国价格水平的上升，将导致该国货币贬值；而一国相对价格水平的下降，将导致该国货币升值。Tariffs and quotas cause a countrys currency to appreciate in the long run.关税和配额使得一国货币在长期中趋于升值。Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall34Preference for commodities in country A to that in country B cause country A currency to appreciate. 对A国的产品相对于B国产品的喜好，使得A国的货币在长期中趋于升值。In the long run, as a country becomes more pro