英语论文网

1. Exchange rates defined
An 美国留学生国际货币经济学论文 exchange rate is the price of one currency in terms of another, or a number of currencies. As such, it is determined in the market place for currencies, and moves up or down in accordance with relative forces of demand and supply. In this case the market place is no longer physical, since currency transactions are these days conducted on dealers screens. This, in turn, means that anyone can deal in currencies at any time of the day or night anywhere in the world. Not surprisingly, exchange rates are, as a consequence, constantly fluctuating as dealers seek to profit from very small movements in rates.

Most transactions are for immediate delivery at the current price on the ‘spot’ market. Such rates are therefore known as spot rates. This is the measure of exchange rates we are all most familiar with; current rates which change during the day of trading. The foreign exchange market typically quotes two prices for spot exchange rates, the purchasing and selling price. To profit from trading in foreign exchange, banks bid to buy foreign exchange at lower rates and sell it at higher rates, the difference being known as the spread. Thus, if you sold currency to a bank and immediately re-purchased it from them, aside from the commission charged for the service, the price you would receive from the bank for your currency would be lower than the level it then charged for the same amount of currency you subsequently purchased. The spread compensates for the anticipated risk the bank associates with holding the currency. Thus, for a relatively ‘safe’ currency such as the Deutschmark or US dollar, the spread will be relatively small. However, for a risky currency like the South African Rand during the political disturbances caused by apartheid, the spread would have been relatively larger to compensate for the increased risk associated with holding the currency.

The foreign exchange market is a relatively pure type of market in that price information is readily available, relatively inexpensively accessed through the electronic media, whilst currencies are homogenous goods - one dollar is the same as another dollar. Thus, it is easy to compare prices in different markets and it is expected that they will be equal world-wide. For example, a rate of £1=$2.5 dollars in London should be exactly replicated in New York and Tokyo. However, if this did not occur, for example with the price £1 = $2.6 in Amsterdam and £1 = $2.4 in London, economic theory predicts that arbitrage will occur to equalise the exchange rates to the international rate. This refers to the fact that discontinuous pricing of homogenous goods leads to profit opportunities for those who can buy cheaply in one market and sell more expensively in another, thereby equalising the prices in both. In the example given here, profit can be made by purchasing dollars with sterling in Amsterdam, thereby receiving $2.6 for every pound, and selling dollars in London for dollars, thereby only having to spend $2.4 dollars for every pound. Thus, arbitrageurs will make a profit of $0.2 dollars on every transaction, which is a considerable amount if trading encompasses millions of currency units. Thus, the demand for dollars rises in Amsterdam and falls in London, causing the exchange rates to shift towards a market equilibrium rate of £1 = $本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。