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Markus Meier
Diese Lernkarten bieten eine grundlegende Einführung in das Thema Währungsumtausch (FX). Sie behandeln die verschiedenen Arten von Währungsrisiken wie Transaktions-, Wirtschafts- und Übersetzungsrisiken sowie Methoden zur Bewertung und Steuerung dieser Risiken. Die Karteikarten erklären auch die Grundlagen der Währungsumtauschraten, einschließlich der Arten von Währungsumtauschraten, der Bestimmungsfaktoren der Währungsumtauschraten und der verschiedenen Währungsumtauschsysteme. Sie eignen sich für Studierende und Fachleute, die ein besseres Verständnis der Währungsumtauschmechanismen und der damit verbundenen Risiken erlangen möchten.
Karten
23
Lernende
1
Sprache
Deutsch
Kategorie
BWL
Stufe
Grundschule
Erstellt / Aktualisiert
06.12.2013 / 13.01.2014

Lernkarten

FX Quotations

Price quotation: Price of the currency on the market

Volume quotation: Volume of the currency on the market

FX Rate-Types

  • Buy rate
  • Sell rate
  • Spread (Buyrate - Sellrate)
  • Cross rate (two foreign currencies)
  • Spot rate
  • Forward rate

Determinants of FX-rates

Demand:

  • Imports paid in FC
  • Redemption of FC loans or nterests
  • Overseas capital investments in FC

Supply

  • Export revenues converted back into HC
  • Interest payments / dividends converted back into HC
  • Capital investments into HC drom overseas

Exchange Rate Systems

  • Freely floating
  • Managed floating
  • Stabilised EXrates
  • Controlled Exrates (DDR)

Retianles for forecasting

  • Hedging decisions
  • Financing decisions
  • Investment decisions
  • Capital budgeting
  • Earnings assessment

Technical Forecasting

  • past and prestent prices
  • assumption that historic price patterns influence future price movements
  • analysation of historic price movements

Fundamental forecasting

  • Relationships between economic variables and FX rates
  • Frequent usage of simple or multiple regression
  • Limtations:
    • Timing of some variables is unnkown
    • Some variables need to be forcasted seperately
    • Some variables are not quantifiable
    • Coefficients from regressions will not remain constant

Market based Forecasting

Usage of spot rate

  • Todays rate used as forecast for future spotrates
  • Assumption - today's rate reflects all known info

Usage of forward rates

  • Rate for a forward business serves as a forecast of the spot rate on this future's due date

Mixed Forecasting

  • No forecasting is superior
  • To better up data different techniques are combined
  • Each technique is assigned a weigth according to its reliablity

EX-rate volatility

  • Measured by the standard deviation (used as probability distribution)
  • Historic movements are used for forecasting
  • Historic volatilities change over time
  • Economic and political factors can cause abrupt changes

Efficient Market Hypothesis - Assumptions

  • Large number of market participants
  • Information is ready and costless
  • Transaction costs are relatively small
  • Prices reflect all information about the currency
  • Prices adjust rapidly to information
  • Prices adjust only to information
  • New information is random - price changes randomly
  • Therefore fundamental and technical analyses are useles

Efficient Market Hypothesis - Degrees of efficiency

Weak form:

  • Fundamental analysis may produce superior investment result
  • Technical analysis may produce superior investment result

Semi-strong form

  • The current price reflects all public information
  • Only fundamental and technical analysis of inside information are usefull

Strong form:

  • Current price reflects all information, including inside information 
  • Fundamental and technical analysis of any data are useless

Implications on Forecasts

  • FX rates cannot be forecasted (Efficient market hypotheses)
  • Companies should hold a well diversified portfolio of currencies
  • Returns that are consistent with the market can be expected (you cannot beat the market over the long time)
  • Impact of FXrisk must be assessed according to the companie's operations

Typey of Currency Risks

  • Transaction risk
  • Economic risk
  • Translation risk

Transaction Risk

Impacts:

  • on Cash Flow values
  • On earnings

Assesment:

  • Estimation of net CF in each currencx
  • Measurement of potential FX exchange risks

Economic Risk

Impacts:

  • on the Firm's value
  • On operating processes:
    • Imports
    • Exports
    • Local sales
    • Investments
    • Financing

Assessment:

  • Sensitivity of earnings
  • Snsitivity of cash flows

Translation Risk

Caused by:

  • Translation of subsidiaries' financial statements
  • Consolidated financial statements are exposed to FX rate movements

Determinants:

  • Proportion of business conducted by foreign subsidiaries and their currency
  • Accounting methods

Decision on hedging Policy

  • Hedging none of the risk
    • Diversification amongst currencies reduces risk
    • No costs of hedging
    • Efficient market hypothesis
  • Hedging all risks
    • Improvement of corporate planning
  • Selective hedging
    • Only hedging when losses are expected

Timing of hedging

Start: settlement of the contract

End: Delivery of the payment

Net Exposure

Short - debt

Long - not

Net Exposure = Short-Long; IS the amouint that needs to be hedged

Criteria for selection of hedging Strategy

  • Time horizon
  • Available instruments and their dis-/advantages
  • Cost

Methods of currency risk management

  • Contractually agreed measures
  • Hedging
  • Restructuring
  • Special Methods

Contractually agree measures

  • Settlement in home currency
  • Settlement in third currency
  • Hedging agreement (FX-rate fixed in the contract - splitting of the risk)
  • Right to select currency for settlement

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