TÀI CHÍNH QUỐC TẾ 1 introduction

International Finance Nguyễn Phúc Hiền, Ph.D Banking and Finance Faculty Hanoi Foreign Trade University References Intructor‘s Slide Levi, Maurice “International Finance“, 4th Ed,2005 Pilbeam, Keith“International Finance“ 3rd Ed, 2006 Melvin, Michael “International Money and Finance“,Boston, 2004 “Tài quốc tế“, PGS TS Nguyễn Văn Tiến, NXB Thống kê, 2010 Journals of Finance and Banking, Economics Website: Bloomberg, Reuter, FX TS Nguyễn Phúc Hiền - ðại học Ngoại thương Grading assessment • • • • Attendance 10% of final grade Mid-term test 30% of final grade Final exam 60% of final grade Bonus (only for students who have good answers to practice problems at class):0,5 point adding to final exam TS Nguyễn Phúc Hiền - ðại học Ngoại thương Aims of the Lecture • To gain insight into the world of international capital flows and exchange rates and their influence on the macroeconomic performance • To understand the interaction between highly complex currency markets and public agents (central bank and Ministries of Finance) • To explain phenomena like asset market booms and financial crisis TS Nguyễn Phúc Hiền - ðại học Ngoại thương Approach of the Lecture • Explanation of exchange rate theories and policies • Verification on the basis of - Macroeconomic data (time series and international comparison) Econometric models TS Nguyễn Phúc Hiền - ðại học Ngoại thương Outline I II III IV V VI VII VIII IX Overview of International Finance Foreign Exchange (Currency) Market Factors Affect Exchange Rate Exchange Rate Policy and Exchange Rate Regime Interest Rate Parity and Purchasing Power Parity Other Exchange Rate Models Balance of Payment Monetary and Fiscal Policies in an Open Economy International Monetary System and International Financial Institutions X International Financial Markets XI Financial Crisis XII The Issue of Exchange Rate in Vietnam TS Nguyễn Phúc Hiền - ðại học Ngoại thương Liên hệ Email: phuchienth@yahoo.com Mobile: 0166 541 1439 TS Nguyễn Phúc Hiền - ðại học Ngoại thương I Overview of International Finance Fundamentals of International Finance The Growing Importance of International Finance Benefits of Studying International Finance TS Nguyễn Phúc Hiền - ðại học Ngoại thương Fundamental of Inter Finance Open Economy: International Trade Flow (Importexport) International Capital Flow (Direct and Indirect Investments) TS Nguyễn Phúc Hiền - ðại học Ngoại thương Fundamental of Inter Finance XK + NK Economy openess index = -GDP TS Nguyễn Phúc Hiền - ðại học Ngoại thương 10 Fundamental of Inter Finance Openness of Economy ( Ratio of export and import to GDP) 2,5 1,5 0,5 Vietnam China Thailand Malaysia Philippines Indonesia Source: ADB and IMF 1990 2006 TS Nguyễn Phúc Hiền - ðại học Ngoại thương 11 Fundamental of Inter Finance Export Growth, Annual Change 40 30 20 10 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 -10 -20 Source: ADB, 2010 Vietnam China TS Nguyễn Phúc Hiền - ðại học Ngoại thương Thailand Korea 12 The Growing Importance of International Finance The growth of international trade • • The world trade has grown by 6% per annum since 1950, roughly twice that of world GDP (45,941.8 bill USD-2006) Imports increased from 315 bill USD (1970) to 13,506 bill USD (2006), or higher 35 times TS Nguyễn Phúc Hiền - ðại học Ngoại thương 13 The Growing Importance of International Finance Reasons for growing international trade: A liberalization of trade and investment via reducing in tariff, quotas, currency controls and others An unprecedented shrinkage of „economic space“ via rapid improvements in communications and transportation technologies and consequent reduction in costs (95% since 1920) TS Nguyễn Phúc Hiền - ðại học Ngoại thương 14 The Growing Importance of International Finance Increased Globalization of Financial and Real Asset Markets In line with the growing importance of international trade, there has been a parallel growth in the importance of foreign investment in the money market, the bond market, the stock market Operation via the world financial centers Efficency of the global allocation of capital flow Reducing investment risk Increasing Exchange rate risk and country risk TS Nguyễn Phúc Hiền - ðại học Ngoại thương 15 The Growing Importance of International Finance Increased volatility of exchange rate Improving exchange rate forecast Diversifying currencies Derivatives TS Nguyễn Phúc Hiền - ðại học Ngoại thương 16 Benefits of Studying International Finance For For For For policy makers financial managers at MNC currency brokers, speculators, investors student of economics, finance TS Nguyễn Phúc Hiền - ðại học Ngoại thương 17