Unit 9: Determinants of FX Rates

1. Financial English Unit 9: Determinants of FX Rates

2. Unit 8 Text Banking Supervision Unit 9: • Revision of Unit 8 • Background information of Unit 9 • Unit 9 • Exercises • Assignment

3. Revision of Text A • Review of Unit 8 • Dictation • Exercises Check-up Blanks filling Reading

4. Spot Dictation Dictation! You are going to hear 5 sentences. Each will be read three times. Write down the sentences according to what you hear. 1. 2. 3. 4. 5. Check-up

5. Dictation Key to Dictation: 1. Banks are often described as our economy's engine. 2. Banking is an industry that is subject both to market competition and considerable regulation 3. Supervision requires the collection and analysis of information. 4. In return, when the depositors suffer from great loss, they may lose confidence in the banks. 5. A key factor of banking supervision is the ability of the supervisors to supervise the consolidated banking organization.

6. Check-up II. Fill in the blanks with proper words or phrases given below issue term note holder reputation dealer ship come due appropriate negotiable

7. Check-up Bankers’ acceptances are very old form of commercial credit. They provide a method whereby a bank may add its good name and to the promissory note of a borrower, thereby making the much more marketable than it would other wise be. Specifically, the mechanics of the operation typically work like this. Suppose that an American exporter sells wheat to a Chinese importer. The of the sale are that the Chinese import will pay for the wheat ninety days after it is shipped.

8. Check-up A for a variety of reasons, however, the American firm may want its money now, and not want to wait ninety days. If so, it may a draft on its bank ordering the bank to pay a stipulated sum of money to of the draft ninety days from now. Along with the draft, the American exporter will send documents showing that the wheat has actually been .

9. Cloze When the bank receives the draft, together with the documentation, it stamps “accepted” across the face of it. By accepting the draft, the bank has given its unconditional guarantee to pay the draft when it . The draft is now a , marketable instrument. It is returned to the American exporter, who will sell it through a regular in banker’s acceptance. (From Finance English by Chen Jianhui) Check-up

10. Check-up Bankers’ acceptances are very old form of commercial credit. They provide a method whereby a bank may add its good name and to the promissory note of a borrower, thereby making the much more marketable than it would other wise be. Specifically, the mechanics of the operation typically work like this. Suppose that an American exporter sells wheat to a Chinese importer. The of the sale are that the Chinese import will pay for the wheat ninety days after it is shipped. reputation note terms

11. Check-up A for a variety of reasons, however, the American firm may want its money now, and not want to wait ninety days. If so, it may a draft on its bank ordering the bank to pay a stipulated sum of money to of the draft ninety days from now. Along with the draft, the American exporter will send documents showing that the wheat has actually been . issue holder appropriate shipped

12. Cloze When the bank receives the draft, together with the documentation, it stamps “accepted” across the face of it. By accepting the draft, the bank has given its unconditional guarantee to pay the draft when it . The draft is now a , marketable instrument. It is returned to the American exporter, who will sell it through a regular in banker’s acceptance. (From Finance English by Chen Jianhui) comes due negotiable dealer

13. Revision of Text A • Review of Unit 8 • Dictation • Exercises Check-up Blanks filling Reading

14. III. Reading Comprehension 1. Suppose that the fractional reserve is 24 percent, thus, when a customer deposits 1000 yuan in a bank, it may immediately set aside _________ as a reserve. A. 24 yuan B. 120 yuan C. 240 yuan D 880 yuan 2. If the fractional reserve ratio is 12 percent, and the original deposit is 1000 yuan, how much new money will be created in the system (Unit: yuan)? A. 8333.33 B. 73333.33 C.6666.66 D120

15. Reading Comprehension 3. Assume your bank has lent all of its available funds based on a reserve of 12 percent and there is a new reserve requirement of 25 percent, it must immediately ___________to build its reserves to meet the new reserve requirement. A. attract new deposits B. make new loans C. take bank deposits D. set aside less money

16. Reading Comprehension • 4. If the Fed issues a change requiring that 20 percent of deposits be set aside as a reserve compared to the former 30 percent. Then the new maximum money in circulation will __________. • become less B. become more • C. not change D. be 10 percent

17. Reading Comprehension 5. Loans made against the ________ are key factor in banking and current fractional reserve deposit money expansion activities. A. requirement B. fractional reserve C. the amount of deposits D. banking regulations

18. Revision of Text A • Review of Unit 8 • Dictation • Exercises Check-up Blanks filling Reading

19. Text : Background Information 外汇是国际贸易的产物，是国际贸易清偿的支付手段。外汇（Foreign Exchange）即国外汇兑，“汇”是货币异地转移，“兑”是货币之间进行转换，从动态上讲，外汇就是把一国货币转换成另一国货币，并在国际间流通用以清算因国际经济往来而产生的债权债务。从静态上讲外汇又表现为进行国际清算的手段和工具，如外国货币，以外币 计价的各种证券。

20. Text : Background Information 外汇汇率是用一个国家的货币折算成另一个国家的货币的比率、比价或价格；也可以说，是以本国货币表示的外国货币的"价格"。由于国际间的贸易与非贸易往来，各国之间需要办理国际结算，所以一个国家的货币，对其他国家的货币，都规定有一个汇率，但其中最重要的是对美元等少数国家货币的汇率。

21. Text : Background Information 基 本 理 论 1）国际平价条件 a）购买力平价(PPP) b）利率平价(IRP) c)费雪效应 2）国际收支模式 3）资产市场模式 4）美元和美国资产市场(略)

22. Text : Background Information 本章旨在通过介绍外汇、汇率的定义，决定汇率的三种理论、汇率的决定因素、以及金融工具让学生重温外汇有关知识。在政治、经济社会生活中， 存在着许多因素会引起货币币值和外汇供求状况发生变化，进而引起汇率发生变动， 在这众多因素中， 我们主要从三个方面来谈： 经济因素，政治因素以及市场心理预期。本章重点外汇和汇率，学生重点掌握外汇和汇率的概念及外汇的决定因素。

23. Text : Background Information • 本章重点难点 • 通过本章学习，学生应该掌握: • 什么是外汇? 什么是汇率? • 决定汇率的理论 • 汇率的决定因素

24. Unit 9: Unit 9 Foreign exchange market Part I:9.1 Foreign exchange and foreign exchange rates Reading Skill Part II: 9.2 Theories of foreign exchange rate Part III:9.3 Determinants of FX rates

25. Text • Listening • Text

26. Listening Text Determinants of FX Rates Listen carefully to the first part of the text and then try to translate it.

27. Text : Determinants of FX Rates 9.1 Foreign exchange and foreign exchange rates Foreign exchange refers tocurrency and money claims, such as bank balances and bank drafts, which is expressed in the equivalent valuein foreign money. Foreign exchange is a commodity, and its price fluctuates in accordance withsupply; exchange rates are published daily in the principal newspapers of the world. The term Foreign exchange is also used to refer to transactionsinvolving the conversion of money of one country into that of another or to the international transfer of money and credit instruments.

28. Text : The use of foreign exchange arises because different nations have different monetary units, and the currency of one country cannot be used for making payments in another country. Because of trade, travel, and other transactions between individuals and business enterprises of different countries, it becomes necessary to convert money into the currency of other countries in order to pay for goods or services in those countries.

29. Text B: Ordinarily, and without government restrictions, the rate of exchange, or the price of the currency of one country in terms ofthat of another, will depend on overall supply and demand and on the relative purchasing power of the two currencies, that is, on the competitive position of the two countries in world market. Changes of foreign exchange rates are notoriously hard to forecast. Any factor that changes the expected returns on domestic or foreign deposits will lead to changes in the exchange.

30. Text : Language Points refer to 指的是，引用 ，谈及 That remark refers to someone else.  那句话是指另一人说的。 This obviously refersto the Nile.  这里说的显然是尼罗河。 He usually refers his pupils to this dictionary.  他平常叫学生查这本字典。

31. Text : Language Points equivalent value等值 ,当量值, 等效值, 换算值 equivalentadj. 相等的, 相当的, 相同的 Yet this was smaller than the concurrent decline of 4.3 per cent in GDP in value terms, due to a net factor income inflow to Tianjin equivalent to about 1.9 per cent of GDP in that year.  不过，这个跌幅已较同期以价值计算本地生产总值的4.3%跌幅为小，因为该年天津有相当于本地生产总值约1.9%的对外要素收入流动净值。 be equivalent to相等[当]于..., 等(同)于, 与... 等效 What is ￡5 equivalent to in French francs? 5英镑相当于多少法国法郎？

32. Text : Language Points in accordance with 与...一致, 依照 Foreign exchange is a commodity and its price fluctuates in accordance with supply and demand. 外汇是一种商品，它的价格随着供求的变化而上下浮动。 He acted inaccordancewith his beliefs.  他按照自己的信念行事。

33. Text : Language Points involve vt.使卷入;包括; 包含; 涉及 All these questions involve policy and tactics.   这些问题，都涉及政策和策略。 He was involved in working out a plan. 他专心致志地制订计划。 Don't involve me in your mistakes.  别把我牵连进你的错误里。

34. Text : Language Points convert（可）转变为； 兑换为； 转而使用 At what rate does the dollar convert into pounds? 美元以什么汇率兑换成英镑？ John has converted to Buddhism. 约翰改信佛教。 He converted assets into cash before he went abroad. 他在出国前把资产转化成了现金。

35. Text : Language Points conversion n.转变 Your case requires a license for conversion and outgoing remittance. 您这种情况要求有换汇和会出许可。 He has undergone a religious conversion after he went to America.  他来到美国后，经历了一次宗教信仰的转变。

36. Text : Language Points in terms of 根据, 按照, 用...的话, 在...方面 Payment is made intermsof cash . 款项以现金支付。 You could think of it intermsof an investment.  你可以从投资的角度来考虑那件事。

37. Text : Language Points notoriously ad. 臭名昭著的, 声名狼藉的 Many existing retailers have done a notoriously poor job of utilizing customer information to date．  迄今，很多现有的零售商在利用顾客信息方面做得极其差。 To some, such extravagant spending on the notoriously fickle young might seem outrageous.  有些人反对花很多钱给小毛孩买奢侈品，认为是种浪费。 One threat that is notoriously difficult to quantify is the illegal pet trade.  一个众所周知的难以确定的威胁来自非法宠物交易。

38. Text B: Reading Skill 1. His credit is good for only￡50 . A) good opinion of others B) reputation coming from the approval or good opinion of others C) a sum of moneyavailable for a person's use Check-up

39. Text B: Reading Skill 1. His credit is good for only￡50 . A) good opinion of others B) reputation coming from the approval or good opinion of others C) a sum of moneyavailable for a person's use

40. Text B: Reading Skill 2. The bank refused further credits to the company. A) reputation coming from the approval or good opinion of others B) belief in the truth, reliability, quality, etc, of someone or something C) the sum of money that a bank makes available to a client Check-up

41. Text B: Reading Skill 2. The bank refused further credits to the company. A) reputation coming from the approval or good opinion of others B) belief in the truth, reliability, quality, etc, of someone or something C) the sum of money that a bank makes available to a client

42. Text B: Reading Skill 3. The bank receives drafts payable at sight at any time。 A) bill of exchange B) an allowance on merchandise sold by weight C) a group of livestock separated from the rest of the herd Check-up

43. Text B: Reading Skill 3. The bank receives drafts payable at sight at any time。 A) bill of exchange B) an allowance on merchandise sold by weight C) a group of livestock separated from the rest of the herd

44. Text B: Reading Skill 4. She balances herself on the balance beam with a single arm.  A) to bring into or hold in equilibrium B) be equal to C) to have the debit and credit totals equal A) calmness of mind B) harmony in the parts of a whole C) a state of equilibrium Check-up

45. Text B: Reading Skill 4. She balances herself on the balance beam with a single arm.  A) to bring into or hold in equilibrium B) be equal to C) to have the debit and credit totals equal A) calmness of mind B) harmony in the parts of a whole C) a state of equilibrium

46. Text B: Reading Skill 5. Every citizen may claim the protection of the law. A) to take B) to call for or need; C) assert one's title or right to Check-up

47. Text B: Reading Skill 5. Every citizen may claim the protection of the law. A) to take B) to call for or need; C) assert one's title or right to

48. Text • Listening • Language Points • Guessing Unknown Words and Expressions

49. Listening Text 9.2 Theories of foreign exchange rate Listen carefully to the second part of the text and then try to translate it.

50. Text : 9.2 Theories of foreign exchange rate In a fixed exchange rateregime, FX rates are decided by its government. The following theories explain the fluctuations in FX rates in a floating exchange rate regime.