尽管有外汇市场的存在，但国际公司并不是经常会承受汇率变换而带来的损失 two functions of foreign exchange market: convert currencies, and provide insurance to reduce foreign exchange risks.
GOLD HEDGING strategy 黄金保值 to against changes in price of gold.
A strong dollar will cause less demand for a country’s exports.
Spot exchange when exchanges happened immediately. Also is the daily rate
Currency swap exchanges happened in different two days.
Brazil, the real Great Britain, the pound
Arbitrate仲裁 occurs when an investor purchases securities in one market for immediate resale in another 现买现卖, buy currency at low price and sell it at high price.
4 trillion dollars are traded every day
2007, CAD ranked at 27th dollar buy more francs
少买多
discount dollar buy less francs
多买少 premium
London is between Tokyo and New York
Three main factors to affect the future exchange rate movements: inflation rate, interest rate and market philosophy.
Bolivia, money supply.
Impediments 障碍， 高效率的市场对自由流动的商品和服务是没有障碍的
PPP
indicates that relatively efficient markets make the “basket of goods” should roughly equivalent in differet country.
PPP
based on the law of one price
.
relatively efficient market also has l ess impediments for international trade and investment exist.
PPP indicates the high inflation rate will see deprecation(弃用）in its currency exchange rate, and changes in relative prices will result in a change in exchange rates.
五年之内，ppp都不是一个好的预测汇率的理论
PPP is best predict exchange rate changes for countries with very high rates of inflation and underdeveloped capital markets
.
International Fisher Effect: same spot exchange rates but different interest rates. selffulfilling prophecies 投资者对未来的预期汇率倾向于成为
自我实现的预言
efficient market school believe investing in exchange rate forecasting services would be waste time
, as the forward exchange rate
