金融专业英语Lesson2 外汇

1、Lesson 2Foreign Exchange and Foreign Exchange ControlForeign Exchange:The term foreign exchange has three principal meanings.In the first place, it means the system utilized in financing international payments. Or it may refer to the subject which is studied to obtain knowledge as to the financial o

2、perations conducted to discharge international obligations.In the second place, it means the media used to discharge international obligations. For the purpose of international finance and exchange, the principal kinds of media are telegraphic transfers, mail transfers, bills, demand drafts, cheques

3、, bankers drafts, foreign bonds, coupons, dividend checks, pension checks, commercial and personal letters of credit, travelers cheques, foreign notes and coin, etc.The third meaning of the term foreign exchange is that it covers, in a general way, the rates at which foreign exchange is quoted.The o

4、verwhelming majority of international payments are made through the media of foreign exchange traded in foreign exchange markets. The foreign exchange market is not an organized market in the same sense as a stock exchange or commodity exchange. In other words, there is no single, physical place whe

5、re purchases and sales are executed. While markets are organized in various ways in different countries of the world, most foreign exchange transactions are simply arranged by two parties and executed by telephone or telex. The most important dealers in foreign exchange transactions are large commer

6、cial banks, which maintain foreign exchange dealing rooms and execute foreign exchange transactions between themselves or on behalf of their corporate customers. Foreign exchange markets perform four major functions: (1) transfer of payments, (2) the provision of credit, (3)payment at a distance, an

7、d (4) allowing hedging against exchange risks.The method of quoting the prices or rates of exchange for different currencies takes one of two forms, the direct quotation method and the indirect quotation method. Under the direct quotation method, the rates are quoted in terms of a variable number of

8、 home currency per fixed foreign currency unit, and China adopts this method. Under the indirect quotation method, the rates are quoted in terms of a variable number of foreign currency units to the fixed unit of home currency, the exchange market in London practices this method.An exchange dealer a

9、lways quotes two rates, at one of which he will buy and at the other of which he will sell the foreign currency. For direct rates then, on the standpoint of the exchange dealer, the maxim is buy low, sell high; for indirect rates, the maxim is buy high, sell low. A distinction must be drawn between

10、rates quoted by a dealer to his customers and the so-called market rates. The market rates are those ruling between the dealers themselves as members of the market. For direct rates, the selling rate to his customers will be higher than that of the market rate, while the buying rate will be lower th

11、an that of the market rate. There are many other exchange expressions, but those who are not well versed in exchange terminology would do well to confine themselves to the use of the expressions favorable and unfavorable when describing movements, in exchange from the point of view of their countrie

12、s, or to the use of appreciate and depreciate when describing a movement in the value of any particular currency. In the case of direct rates, lowrates are for us(favourable from a national viewpoint) and high rates are against us(unfavourable from a national viewpoint), or vise versa in the case of

13、 indirect rates.Exchange Control:Exchange control means official control in the foreign exchange dealings of a country. The control may extend over a wide area, covering the import and export of goods and services, remittances from the country, inflow and outflow of capital, rate of exchange, method

14、 of payment, maintenance of balance in foreign centers, acquisition and holding of foreign securities, financial relationship between residents and non-residents. Exchange control restricts the right of holders of a currency to exchange it for other currencies. It thereby renders a currency inconver

15、tible.The main objects of exchange control resorted by most developing countries are to prevent pressures on balance of payments from adversely affecting official holdings of international reserves or the local currencys external value, to bring the balance of payments into equilibrium and insure th

16、at the flow of trade and capital contributes to their development goals.Besides the control on the import and export of goods, the other methods used for exchange control are (1) control of the exchange rate, (2) fixing the currencies in which payments for imports and exports should be made and rece

17、ived, to and from specified countries, and (3) bilateral agreements between two countries contracted principally for the purpose of avoiding the balance of payments deficit. The responsibility for enforcing exchange control laws, regulations and co- ordinating exchange control policy generally rests

18、 with the ministry of finance. The administering of the exchange control regulations is often entrusted to a central bank, but there are many cases where this task is divided among a number of departments or agencies, each with control over specific international transactions.Exchange control system

19、 varies from country to country. Most countries adopt single-rate systems in which all foreign exchange transactions are carried on at one official rate of exchange. Single-rate systems are administered by an exchange control authority that is the sole buyer and seller of foreign exchange. Exporters

20、 and others who receive foreign exchange from foreign residents are to surrender it to the control authority at the official rate. Importers and others who want to make payments to foreign residents must obtain permission to buy foreign exchange from the control authority at the official rate. The c

21、ontrol authority may also regulate the use of domestic currency (bank account) owned by foreign residents. Commercial banks are usually authorized to act as buying and selling agents of the exchange control authority. Single exchange-rate systems are usually strengthened by a system of import quota

22、and /or import licences, and export licences. Ordinarily the import licence also serves as an exchange licence permitting the importers or others to buy foreign exchange. In some countries, however, an exchange licence is needed in addition to an import licence.The Chinese Foreign Exchange System:（自

23、学）The foreign exchange control has been in place since the establishment of the Peoples Republic of China. Before 1979, due to severe lack of foreign exchange resources, the foreign exchange control was strictly enforced. Since the introduction of the economic reform and the policy of opening to the

24、 outside world, Chinas highly centralized foreign exchange control system has greatly2changed, resulting in less state intervention and greater role of market forces in line with the evolution of the socialist marketing economy. The reform of Chinese foreign exchange system accelerated in 1994 with

25、the introduction of conditional current account convertibility, unification of exchange market and adoption of a market-based managed floating exchange rate. On November 27, 1996, China formally lifted all remaining current account restrictions and become an Article VIII member of the International

26、Monetary Fund. The payment in transfer of foreign exchange for international transactions under current account was no longer subject to the government control or restriction.The State Administration of Foreign Exchange (SAFE) is the agency responsible for foreign exchange administration. The SAFE h

27、as a similar branch structure with that of the Peoples Bank of China, Chinas central bank. The Banking of China remains the principal foreign exchange bank. Other banks and financial institutions, including affiliates of non-resident banks, may handle designed transactions with the approval of the S

28、AFE. The state implements a reporting system for balance of payments statistics. All entities and individuals involved in transactions that directly affect balance of payments must report data for compilation of balance of payments statistics. Foreign currency is prohibited from being circulated and

29、 shall not be quoted for pricing or settlement. China has maintained a unified managed floating exchange rate since January 1994. The exchange rate of the renminbi is determined by the inter-bank foreign exchange market. The Peoples Bank of China (PBC) announces a reference rate for the renminbi aga

30、inst the U.S. dollar, the Hong Kong dollar, and the Japanese yen based on the weighted average price of foreign exchange transactions during the previous days trading. Daily movement of the exchange rate of the renminbi against the U.S.dollar in inter-bank foreign exchange market is limited to 0.3%

31、on either side of the reference rate as announced by the PBC. The buying and selling rates of the renminbi against the Hong Kong dollar and the Japanese yen may not deviate more than 1% on either side of the reference rate. In the case of other currencies, the deviation may not exceed 0.5% on either

32、 side oftheir respective rates.Designated foreign exchange banks and other financial institutions involved in foreign exchange operations are dealers in the inter-bank foreign exchange market. Based on the exchange rates announced by the PBC and the specified margins, designated foreign exchanged ba

33、nks and other financial institutions undertaking foreign exchange operations can quote the buying and selling rates for their clients and conduct the trading of foreign exchange accordingly.The Shanghai based China Foreign Exchange Trading Center is a nationally integrated electronic system for inte

34、r-bank foreign exchange trading. It is electronically linked with foreign exchange trading centers located in major cities.The currencies and approaches of foreign exchange market transactions are specified and adjusted by the SAFE. The SAFE supervises the foreign exchange market throughout the country in accordance with the law.Exercises：I. Translations:1外汇2电汇信汇票汇3外国债券4汇率5升值贬值6支付转3移 7远方付款8直接间接标价法9本币外币10.双边协议11.国家