FOREIGN EXCHANCE AND INTERNATIONAL

FINANCIAL MARKET& MANAGEMENT

Kelompok 4 :
Rahadian Assaf
Muhammad Ramdhani
Cornelia Aryanti
Wahyu Murcahyati
FOREIGN EXCHANGE
Foreign exchange (Valuta asing) adalah
sebuah komoditas yang terdiri dari mata
uang yang diterbitkan oleh negara lain.

DEMAND FOR AND SUPPLY OF YEN
THE MARKET FOR YEN
FOREIGN-EXCHANGE RATES
Direct exchange rate
Indirect exchange rate

STRUKTUR DARI PASAR VALUTA ASING
Pasar valuta asing terdiri dari pembeli dan
penjual mata uang yang dikeluarkan oleh
banyak negara.

PERAN BANK
Membeli atau menjual mata uang yang
utama

BANK FOREIGN EXCHANGE CLIENTS
Commercial customers
Speculators
Arbitrageurs
SPOT AND FORWARD MARKETS
Spot Market: foreign exchange transactions
that are consummated immediately
Forward Market: foreign exchange
transactions that are to occur sometime in
the future

ARBITRAGE
Arbitrage of Goods
Arbitrage of Money

ARBITRAGE OF MONEY
Two-point
Covered-interest
Three-point

THREE-POINT ARBITRAGE
INTERNATIONAL CAPITAL MARKET
Major International Banks
International Bond Market
Global Equity Markets
Offshore Financial Centers
MAJOR INTERNATIONAL BANKS
Number Company Country
1 ING Group Netherlands
2 Fortis Belgium/Netherlands
3 Citigroup USA
4 Dexia Group Belgium
5 HSBC Holding UK
6 BNP Paribas France
7 Credit Agricole France
8 Deutsche Bank Netherlands
9 Bank of America Corp. USA
10 UBS Switzerland
THE INTERNATIONAL BOND MARKET
Major source of debt financing for:
Worlds governments
International organizations
Larger firms
Two types of bonds
Foreign bonds
Eurobonds

GLOBAL EQUITY MARKETS
Start-up companies are no longer restricted
to raising new equity only from domestic
sources

OFFSHORE FINANCIAL CENTERS
Focus on offering banking and other financial
services to nonresident customers
Locations
Bahamas, Bahrain, the Cayman Islands,
Bermuda, the Netherlands Antilles, Singapore,
Luxembourg, Switzerland

FINANCIAL ISSUES IN
INTERNATIONAL TRADE
Which currency to use for the transaction
When and how to check credit
Which form of payment to use
How to arrange financing

METHOD OF PAYMENT
Payment in Advance
Open Account
Documentary Collection
Letters of Credit
Credit Cards
Countertrade


FORMS OF DRAFTS USED WITH
DOCUMENTARY COLLECTION
Sight Draft
Time Draft

ADVANTAGES/DISADVANTAGES OF
DOCUMENTARY COLLECTION
Advantages
Reasonable fees
Enforceable debt
instrument
Simple
collections
process
Prompt
payments
Disadvantages
Refusal of
shipments
Decline draft
acceptance
Potential for
default

DOCUMENTATION FOR
LETTERS OF CREDIT
Export Licenses
Certificates of Product Origin
Inspection Certificates



TYPES OF LETTERS OF CREDIT
Advised letter of credit
Confirmed letter of credit
Irrevocable letter of credit
Revocable letter of credit

FORMS OF COUNTERTRADE
Barter
Counterpurchase
Buy-back
Offset purchase

FOREIGN-EXCHANGE EXPOSURE
Transaction Exposure
Translation Exposure
Economic Exposure

OPTIONS FOR RESPONDING TO
TRANSACTION EXPOSURE
Go naked
Buy forward currency
Buy currency option
Acquire an offsetting asset

MANAGEMENT OF WORKING CAPITAL
Minimize working-capital balances
Minimize currency conversion costs
Minimize currency conversion costs

MINIMIZING CURRENCY CONVERSION COSTS
Bilateral netting
Multilateral netting

EVALUATING INVESTMENT PROJECTS
Net Present Value
Internal Rate of Return
Payback Period

SOURCES OF INTERNATIONAL INVESTMENT
CAPITAL
External Sources
Internal Sources
Strategic Use of Transfer Pricing