Foreign Exchange

Foreign Exchange - Part 3


This eCourse consists of two modules on FX Forward Market. Corporates and fund managers need to analyze all their options when they are investing or borrowing money. The best deal may not be obvious at first, so they need to weigh up the different options ?these options can involve borrowing or investing in foreign currencies and the use of swaps to hedge the FX exposure. Module 1 looks at the decision to invest/borrow in a foreign currency and the additional costs that may be incurred when hedging the associated FX risk.

Non-deliverable forwards (NDFs) have seen incredible growth as a means of hedging the volatility in the currencies of emerging economies. In Asia, their use has grown tenfold since the turn of the century. As trade between developed and developing economies continues to increase, so too does the level of demand for methods of hedging against adverse currency fluctuations.

Module 2 describes how NDFs are used to lock in future exchange rates, lists the details included in NDFs contract, and explains how they are traded. It also explores the payoff achieved through the use of an NDF.


On completion of this course, you will be able to:
- Describe how FX forwards can be used for arbitrage
- Explain how the currency risk can be managed with FX forwards when borrowing and investing in foreign currency
- Describe the basics of NDFs, why they are used, and by whom
- Recognize how NDFs are quoted on trading platforms
- Explain the process by which the settlement amount is calculated under an NDF


Module 1: FX Forward Market - Cross-Currency Borrowing & Investing
Topic 1: Using FX Swaps in Cross-Currency Finance
Topic 2: Using Relative Value in Different Currencies

Module 2: FX Forward Market - Non-Deliverable Forwards (NDFs)
Topic 1: Basics of NDFs
Topic 2: Calculating NDF Settlement Amounts


Relevant Subject
Type 3 - Leveraged foreign exchange trading
SFC:1.50, PWMA:1.50
Chinese Securities Association of Hong Kong (HKCSA): HK$470
Staff of Corporate Member: HK$450
Non-Member: HK$675
All Member: HK$450