Subject Overview

A graduate-level study of foreign exchange markets, integrating market foundations, exchange-rate economics, instruments, pricing, exposure management, corporate treasury, analytics, regulation, technology, ethics, and emerging industry developments.

Learning Goal

Students will be able to interpret FX markets, value major instruments, analyze exchange-rate drivers, measure and manage currency risk, evaluate hedging and treasury decisions, apply market data and analytics, and assess governance, technological, and strategic developments in international business.

Syllabus

1. Foreign Exchange Markets and International Business

Learning Objective: Explain the purposes, economic functions, historical development, scale, participants, currency classifications, and strategic importance of FX markets to trade, investment, financing, and multinational enterprises.

Category: foundation

2. FX Terminology, Quotations, and Market Calculations

Learning Objective: Apply base and quote currencies, bid–ask spreads, pips, cross-rates, appreciation and depreciation, percentage returns, value dates, notional amounts, and profit-and-loss calculations.

Category: foundation

3. FX Market Structure, Participants, and Trading Venues

Learning Objective: Analyze dealer, interbank, broker, exchange-traded, electronic communication, prime-brokerage, retail, and offshore markets, including liquidity, market hours, order types, and participant incentives.

Category: core

4. Balance of Payments and Exchange-Rate Regimes

Learning Objective: Connect current, capital, and financial accounts to currency demand and supply; compare floating, fixed, pegged, managed, and currency-board regimes; and assess convertibility, controls, and intervention.

Category: core

5. Exchange-Rate Determination and Parity Theories

Learning Objective: Critically apply purchasing power parity, interest-rate parity, the Fisher effect, monetary and portfolio-balance models, overshooting, expectations, and behavioral explanations of exchange rates.

Category: core

6. Spot, Forward, and FX Swap Markets

Learning Objective: Price and value spot transactions, outright forwards, forward points, nondeliverable forwards, and FX swaps using covered interest parity, collateral conventions, and market settlement practices.

Category: core

7. Currency Derivatives and Structured Products

Learning Objective: Evaluate futures, options, option strategies, currency swaps, and selected structured products using payoff analysis, option Greeks, volatility, and appropriate valuation concepts.

Category: core

8. Currency Exposure Identification and Measurement

Learning Objective: Distinguish transaction, translation, economic, contingent, and competitive exposures; map cash flows; calculate net positions; and use sensitivity, scenario analysis, stress testing, and FX value at risk.

Category: application

9. Hedging Strategies and Decision Frameworks

Learning Objective: Design and compare natural hedges, forwards, money-market hedges, futures, options, swaps, and layered hedging using cost, risk reduction, accounting, liquidity, and strategic flexibility criteria.

Category: application

10. Corporate Treasury and International Business Decisions

Learning Objective: Integrate FX considerations into pricing, sourcing, capital budgeting, financing, working capital, intercompany funding, cash pooling, transfer pricing, and treasury policy while aligning risk appetite with business strategy.

Category: strategic

11. Market Analysis, Forecasting, and Decision Analytics

Learning Objective: Use macroeconomic, fundamental, technical, positioning, volatility, correlation, and event data to develop forecasts; evaluate model error and uncertainty; and translate analysis into disciplined decisions.

Category: advanced

12. FX Trading, Liquidity, and Market Microstructure

Learning Objective: Assess order flow, price discovery, spreads, depth, execution quality, slippage, carry and momentum strategies, leverage, margin, stop-loss controls, performance attribution, and trading risk.

Category: advanced

13. FX Operations, Regulation, Ethics, and Governance

Learning Objective: Examine confirmations, clearing, settlement and Herstatt risk, CLS, collateral, accounting and reporting, conduct rules, benchmark integrity, sanctions, AML/KYC, model risk, controls, audit, and ethical responsibilities.

Category: strategic

14. Digital Transformation, AI, and the Future of FX

Learning Objective: Evaluate electronic and algorithmic trading, APIs, cloud treasury systems, machine learning, alternative data, automated hedging, cybersecurity, CBDCs, tokenized deposits, stablecoins, and evolving market and regulatory requirements.

Category: contemporary