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How the Foreign Exchange Market Works
  • Overview
  • Objectives & Outline
  • Methodology
  • Participant Profile
  • Trainer
  • Overview
    PROGRAMME DETAILS

    DATE

    20 - 21 April 2020

    TIME

    9:00 AM – 5:00 PM

    VENUE

    Asian Banking School

    This two-day programme will provide an understanding of the workings of the Foreign Exchange market. It brings participants through the background of how the world arrives at the current floating-rate regime, the factors that influence exchange rates, the risks posed by exchange rates fluctuations to business and the financial instruments employed to hedge these exchange risks.

    LEARNING LEVEL

    Foundation

    PROGRAMME FEE

    AICB MEMBER

    MYR

    2,200*

    / PAX

    NON-MEMBER

    MYR

    2,700*

    / PAX

    *Subject to 6% Service Tax

  • Objectives & Outline
    LEARNING OBJECTIVES
    By the end of the programme, participants will be able to:

    • Identify and understand Foreign Exchange Risks
    • Know the factors that influence foreign exchange, and in particular:
      • Understand what the relationship between balance of payments and exchange rates
      • Understand how monetary and fiscal policies affect exchange rates
      • Understand how the central banks fix exchange rates and intervene in forex markets
      • Understand how Carry Trades impact exchange rates
      • Understand how Forward Foreign Exchange Rates are determined
      • Understand how Forward Foreign Exchange Swap works
      • Understand how a Currency Swap works
    • Gain knowledge on how the various hedging instruments are used
    PROGRAMME OUTLINE

    Overview of the Foreign Exchange Market

    Describes the main players in the foreign exchange markets, and what are their respective purposes and objectives in having an involvement in this market. These set the stage for the subsequent discussions on how their
    actions and operations influence the foreign exchange movements. This will in turn make clear the impacts of the players on the market, and in the case of the major players, how their actions cause the upheavals in the market.

    The Background on how the world arrives at the current floating rates regime

    This section gives the participants a good grounding on historical developments in the foreign exchange markets. Starting from the Gold Standard System, it gives the participants an understanding of how exchange rates were once determined, and what were the impediments that were inherent in this system. This led subsequently to the rise of the Bretton Woods System.

    How the Exchange Rate is determined in the short run:

    Supply of currency on the foreign exchange market

    • Demand for goods, services, and investments priced in that currency
    • Speculations on future demands of that currency
    • Central banks occasionally buy up foreign currency to affect the exchange rate

    This section gives the participants a good theoretical grounding on the aspects of exchange rate determination. This will set the stage for the subsequent sections, where the real-life exchange rate events are discussed and analysed.

    How the Exchange Rate is determined in the long run:

    • Purchasing Power Parity (PPP)
    • Relative differences in productivity
    • Trade barriers
    • Import and export demand

    This section picks the four most important factors to analyse how exchange rate is determined in the long run comprising both theoretical and real-life analysis.

    Factors that influence the foreign exchange market 

    • The relationship between Balance of Payments and Exchange Rates
    • How Monetary and Fiscal Policies affect exchange rates
    • How central banks fix the exchange rate and intervene in the forex markets
    • The importance of Foreign Currency Reserves
    • The role of Carry Trades – how they work and how they impact the emerging markets
    • Quantitative Easing – how it comes about and how it impacts the forex markets

    How Exchange Rates are quoted

    • Base Currency and Counter Currency
    • Bid and Offer Rates
    • Cross Rates

    This section seeks to familiarise the participants with the convention of quotations in the currency market. The participants will go away understanding the terminology used in the trade.

    Foreign Exchange hedging instruments, and how they work

    • Forward Contract
    • Forward Foreign Exchange Swap
    • Currency Swap

    This section effectively comprises the study of derivatives commonly used in the foreign exchange market. It seeks to give a detail description of the mechanism of forward contract, forwarded foreign exchange swap and currency swap.

    Specifically:

    How the Forward Rate is arrived at. The participants will have a good grasp on how the treasury of a bank works out the forward rate when its customer requests for a forward contract for its hedging purpose. The participants will have a good appreciation on the requirement for access to the domestic currency in order to work out a forward rate and that the interest rates of the pair of currencies involved are crucial in arriving at the rate.

    Case Studies

    • Why is the US dollar the central vehicle currency for cross rates in foreign exchange trading?
    • Dissecting the Asian Financial Crisis
    • Why China cannot float its exchange rate
    • The functions and purpose of the International Monetary Fund (IMF)
    • How the Non-Deliverable Forward (NDF) is used to attack a currency

    These case studies serve as the final wrap-up on the course – bringing together all that has been analysed to apply them in real-life and recent events, and to illustrate how the foreign exchange market works.

  • Methodology

    Power points/slides, lecture, whiteboards, the internet, case studies, group discussions, quizzes and multiple choice questions

  • Participant Profile

    Relationship Managers and Credit Analysts whose clients are business enterprises facing the vicissitudes of the foreign exchange rate fluctuations and would like to gain a deeper understanding of how their client’s business is impacted and what the hedging options are. Also applicable for Wealth Management Relationship Managers to gain an understanding on how forex risks affect the structured products they sell to their clients and how the client’s investments are thus impacted.

  • Trainer

    Yeow Tiang Hui

    Yeow Tiang Hui is a Senior Consultant and the Director of Commercial Banking Training at the Asian Banking School. He has 28 years of experience in banking and investment, having first worked with small and medium enterprise clients at United Overseas Bank and Citibank N.A., Singapore. He then moved on to manage multinational accounts in Deutsche Bank AG, which was followed by managing large local corporate clients in Citibank/Citicorp Malaysia, where he was also Vice President in their venture capital outfit and the Head of Commercial Banking.

    From 1997 to 2005, he served as Head of the offshore banking business of the French banking group, Crédit Industriel et Commercial covering Malaysia, Greater China and the Philippines. After that, from 2007 till 2016, he served as the Head of Corporate Banking at Kuwait Finance House. His last position was as the Chief Executive Officer or Alkhair International Islamic Bank.

    Yeow graduated in Economics from the National University of Singapore where he studied International Finance, Banking & Monetary Economics. He obtained further training in banking and finance from the Institute of Banking & Finance in Singapore, Deutsche Bank Asia Pacific, and Citibank Asia Pacific Banking Institute, where he studied Credit & Financial Analysis, Applied Financial Services, International Trade Finance, Corporate Finance and Financial Derivative Products. He is fluent in Chinese, English, Malay and the Indonesian languages, and has worked in the Singaporean, American, German, French, Middle Eastern and Malaysian environments.


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