A78609 International financial and foreign exchange markets

The course aims at:

1. Offering a closer insight into daily FX market functioning (trading, hedging, settlement…);
2. Letting you discover the rationale and the historical evolution of the current worldwide financial infrastructure;
3. Developing a stronger understanding of some of the most recent issues on worldwide financial markets (“Argentine Great Depression”, Lehman Brothers bankruptcy, Euro crisis…);
4. Providing both a strong conceptual background and an in-depth practical overview of the main topics discussed throughout the course.

At the end of the course the students will be able:

1. to understand the complexity of the global financial system, together with its risks and opportunities;
2. to evaluate in a critical way the soundness of national and international financial systems, resting on such elements as the Balance of Payments, the international flows of goods, services and capitals, the adopted exchange rate regimes and the monetary policy decisions implemented by the Central Banks.
3. to master the mechanics of Forex trading as well as of foreign exchange rate markets;
4. to build simple internationally-diversified portfolios;
5. to assess the risks arising from international investments with the aim of selecting the most suitable hedging procedure(s).

International financial markets are a powerful engine of both growth and disaster for the global economy. They facilitate the transmission of positive and negative economic shocks among nations and pose challenges and opportunities to firms and investors.

Aim of the course is to let you master the functioning of foreign exchange markets and international portfolio diversification, as well as to gain an insight about many current crucial issues concerning international financial markets on a worldwide scale. Attention will be paid to the historical evolution of the international financial infrastructure, as a necessary prerequisite to develop a stronger understanding of the complex dynamics lying at the basis of today’s global markets.

A major focus will be on:

1. FX markets’ functioning;
2. Exchange rate parity conditions and exchange rate determination;
3. International risk management;
4. Exchange rate predictability;
5. Diversified international investments

The course aims at developing a sound conceptual and practical background for all the discussed topics: in order to achieve this task, all the lessons revolve around a continuous blend between the macroeconomics and the microeconomics of international financial markets, with a particular focus on FX market functioning and trading mechanisms.

Students are strongly incentivized to develop a clear understanding of the theoretical framework dealt with in class through extensive examples and practical exercises. Even though not strictly required, a sound background in International Economics is warmly recommended. Some preliminary knowledge of Market Finance and major derivative products would also be of great help.

The website of the course on “my.liuc.it” must be consulted on a regular basis to check for updates, additional material and slides about the course. No excuse accepted for any failure during the course you may incur into due to a delayed consultation of the website.

In your own interest and the interest of your colleagues, please strictly observe the following courtesy rules:

1. Arrive in class on time; do not leave early without prior explicit instructor’s approval
2. Keep your mobiles and laptops off; do not chat with your classmates
3. Do not wander in and out of the classroom

Because of the current Covid19 health emergency and as long as social distancing measures apply, exams will be oral (via MS Teams).