/ PFT Online Course on 'FUNDAMENTALS OF THE FOREIGN
Introduction and Background
your definition of a financial market is that it brings borrowers
and lenders together or facilitates this function, the foreign exchange
(forex) market is not a financial market. Consider when a company
buys foreign exchange (USD for LCC ) from an authorised forex dealing
bank to pay for imports: it gets a credit to a bank account in the
USA or a USD deposit in a bank somewhere convenient. To pay for
this the company's local bank account is debited. Has lending and
borrowing taken place? No.
What then has occurred? The company
exchanged a local bank deposit (currency = LCC*) for a foreign bank
deposit (currency = USD). Where does a bank deposit fit in the financial
system? Answer: the money market. So what is the conclusion? It
is that the forex market is not a financial market; rather, it is
a conduit into a foreign money market.
The forex market being a conduit into
a foreign money market in many cases can be considered to be the
first round. Consider: when an investment into USD bonds is made
by a local investor, s/he first buys the USD (ie a credit to his/her
USD account = a money market transaction). S/he now has the required
USD funds to buy USD bonds. This is the second round, and s/he has
does a bond market transaction in the USA (or the Eurobond market).
It is an understatement to say that
the forex markets of the world are immense. The high level of turnover
indicates that the forex market is an efficient market, ie price
discovery is sound - as reflected in the small spreads in the larger
markets of the developed world. In turn this means that one can
effect a large forex transaction with a quick phone call. It is
a quote-driven market (as opposed to an order-driven market such
as the equity market) and it is firmly the banks' province. They
quote bid and offer rates simultaneously once the volume of the
transaction is disclosed, and the quote recipient can deal either
side of the quote.
As in the spot forex market, the derivative
forex market is efficient, allowing, for example, a company to do
a large forward deal as quickly as a spot deal. The company can
also do currency swaps, forward-forwards, option date forwards,
and more, at the drop of a hat.
In this module all aspects of the forex
market are covered, including its organisational structure, cross
rates, spreads, quotation conventions, the role and importance of
exchange rates, its participants, its relationship with the balance
of payments and the money stock, and other relevant issues.
(local country currency) is a fictitious currency.
||when slots are full
||October 4 to November 5,
||Minimum of 35 hours
||US $ 400/-
||UNITAR Geneva (Course Administration
and Technical Questions)
The overall objectives of the course are to:
- Expose the student to the environment
of the forex market.
- Make clear the link between the
forex market and the money market.
- Demystify the jargon of the forex
- Equip the student with the theoretical
backdrop to the forex forward markets: the time value ofmoney
and the arbitrage principle.
- Expose the student to the quantitative
elements of the forex market
The intended audience is:
- Members and employees of securities
- Dealers in forex and other parts
of the financial sector.
- Financial market analysts.
- Company treasury managers and dealers.
- Employees of treasury management
- Private sector bankers.
- Central bankers.
- Government treasury officials.
After completing the course the student should / should be able
- Elucidate the environment of the
forex market: the financial system
- Discuss the characteristics of the
- Understand and elucidate the forward
market instruments, including their theoretical fair value prices.
- Expound on the other risk management
tools of the forex market.
- Elucidate the link between the forex
market, the balance of payments, the liquidity of banks and the
Structure / Outline
This online course will involve a mix
of self-study and online interaction culminating in a practical
understanding of money market through online group work. Throughout
the duration of the course, participants will go through theoretical
and conceptual material prepared by UNITAR and will have an opportunity
to relate it to real-life situations through online discussions
and peer-to-peer interaction. There will be a quiz/assignment at
the end of the course which is a requirement for obtaining a course
There are 6 sections to the course:
Module 1 Foreign Exchange Market:
This module is a discussion on the basics of the forex market
and is elucidatory in nature. It includes topics such as organisational
structure, two-way prices, the spread, cross rates, appreciation
and depreciation, spot and forward exchange rates and so on. An
understanding of the basics is essential to an integration of
the issues of the other modules.
Module 2 Foreign Exchange Market:
This module presents a detailed description of the characteristics
of the forward market, which is a large and active market. There
are four types of forward contracts: outright forwards, forex
swaps, forward-forwards and option date forwards. Each is covered
but the closest attention is afforded the first-mentioned because
it represents the bulk of this market.
Module 3 Foreign Exchange Market:
Derivatives: Futures, Options and Swaps
In this module the derivative instruments, other than forward
contracts, pertaining to the forex market are discussed, and they
are currency futures, currency options and currency swaps. These
markets are large, but the forward markets dominate.
Module 4 Foreign Exchange Market:
Risks other than Currency Risk & other Risk Management Tools
Currency risk is the superior risk in the forex market. There
are many others, which pertain especially to developing g countries,
such as settlement risk, availability of information, trading
methods, transactions costs, and so on. Similarly, there are other
risk management tools (to the derivative markets), such as utilisation
of local loans, dual-currency bonds, barter, and so on.
Module 5 Foreign Exchange Market:
This module covers the role of each of the participants in
the forex market, which includes the dealer banks, the forex brokers,
the central bank, the government, retail clients, non-authorised
dealers, the corporate sector, arbitrageurs, and speculators.
Module 6 Foreign Exchange Market:
Effect on Money Stock & Money Market Liquidity
The forex market is closely related to the money market. Therefore,
forex transactions have an impact on bank liquidity and the money
stock, depending on which institution does the transaction. This
module discusses forex transactions within the framework of the
money identity (balance sheets of banks and central bank) and
the money market identity (central bank balance sheet only).
This course will be conducted over the internet using UNITAR's e-Learning
infrastructure for a five-week period. Participants will require a
minimum of 90 minutes of study each day. The course pedagogy will
allow for three levels of interaction. At the first level, the participants
will interact with the training content. At the second level, the
participants will interact with other participants to share experiences
and learn in a contextual manner (using an online discussion board
facility). At the third level, the participants will interact with
a seasoned international negotiator (course mentor) who will moderate
the course for its entire duration. At the core of this course is
a set of online interactions and discussions, each of which will be
coached by an expert.
UNITAR online courses attempt to create
a networked learning environment, in which participants have the
flexibility to learn at their own convenience and pace but also
are able to interact with peers and experts through the discussion
This online course will be conducted
in the English language.
This course is designed as an online course in which participants
will be primarily responsible for their own learning. Each lesson
will consist of the following components:
Reading Materials (Compulsory Reading Materials):
these materials are intended to educate the participants
about the basic concepts and principles applicable to the subject-matter
of the lesson. It will include, where appropriate, sample materials.
These materials will constitute the required reading materials
for the lesson
Reading Materials (Optional Reading Materials): this
will consist of optional reading materials for participants who
wish to learn more about the topic than what is covered in the
Links: This will refer the interested participants
to additional books, articles, documents, and websites that deal
with the issues raised in the lesson.
A glossary of terms tailored to the online course will
be provided to the participants and act as a learning support
during the entire course.
At the end of each lesson there will be a set of quizzes
for participants to answer. These quizzes are designed to test
the participant's understanding of the lesson. Participants are
required to pass each quiz and obtain at least 80% or more passing
grade in order to be eligible for a certificate. All quizzes will
need to be taken online.
Discussion Board: There will be a community discussion
board available on which participants can post questions or comments
that can be seen by the instructor and the other participants.
This discussion board will be moderated by the course director
and UNITAR. Structured discussion strings will be posted on a
All successful participants will be
eligible to a certificate after completion of this online course.