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The World Monetary System, Balance of Payments, Fundamental Equilibrium Relations,
Foreign Exchange Market Mechanism, Currency Risk Management and International Financing
form the subject of study. The initiation is through an understanding of ‘Exchange
Rate Regimes’. Starting with the Gold Standard and the Bretton Woods system, Dr. P G Apte of IIMB,
conducts the study through Floating Systems, SDRs, the role of IMF, Adjustment Processes
and Currency Blocks. The topic of Balance of Payments touches upon accounting thumb-rules
(also see FM/AC2), concepts of current account, capital account, defi cit, surplus
and convertibility. How are exchange rates determined? What is ‘Purchasing Power
Parity’ and ‘Covered Interest Parity ’? What are the various models of exchange
rate determination? These questions are answered under the topic of Fundamental
Equilibrium Analysis. The Global Forex Market, Exchange Rate Quotations, Arbitrage
and the Forex Market in India are covered. Classifi cation of Currency Risk and
Exposure Management is the penultimate topic. The lesson concludes with an introduction
to Euro-markets, major funding avenues and GDRs.
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25 Mins
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31 Mins
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95 Pages
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Equivalent classroom time: 12hrs
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