杏吧论坛

Dr Elisabetta Bertero

This course is available on the CEMS Exchange, Global MSc in Management, Global MSc in Management (CEMS MiM), Global MSc in Management (MBA Exchange), MBA Exchange, MSc in Accounting and Finance and MSc in Management (1 Year Programme). This course is available with permission as an outside option to students on other programmes where regulations permit.

Students on other MSc programmes are welcome to choose this course, provided their MSc programme regulations permit and provided they meet the pre-requisites below.  These students need to sign up for the course on LfY first and then email the course leader with information on their economics and/or finance background and their motivation for choosing the course. The course leader will then approve their application on 杏吧论坛 for You.  In the past students on the International Political Economy MSc, MPP, MPA, MSc in Economic History, European Institute, Master of Science in Development Management, Master of Science in Economy  Risk and Society, Master of Science in Law and Accounting have enjoyed this course.

This course is not open to students from the following departments: Economics, Finance, Mathematics, and Statistics.

Essential information for the compulsory research project and an overview of the course are provided during the first lecture and the first class in January 2021.  Students interested in this course, whether already enrolled or exploring the course as a possible option, are required to attend both lecture and class during the first week of term.

The objective of the course is to equip students with the relevant academic research, techniques and analytical skills to interpret current developments in the fast-changing area of international finance, from the shifts in capital flows to the electronification of forex trading, from the persisting dominance of the US dollar in the international monetary order to China’s alleged exchange rate manipulations, from the development of cryptocurrencies to the turbulence in the oil market, from the rise in global imbalances to the Eurozone response to COVID-19.

This course approaches such key issues and topics in international finance using foreign exchange and exchange rates as a unifying theme. The foreign exchange market is the largest financial market, turning over every couple of weeks the equivalent of the yearly value of pre-C19 global GDP. It is also a unique market where prices are determined not only by the fundamentals of this asset class but also by government and central bank interventions.  Exchange rates are an open economy’s most important price as they can affect the relative value of the entire economy.

This course provides a 360-degree perspective on exchange rates divided into four parts:  theory, government policy, global risk and markets.

First, the course considers what finance and economic theory identify as the determinants of the relative price of two currencies. Macroeconomic, market microstructure and behavioural finance approaches are examined. Second, the course analyses governments’ available policy choices to influence the level and volatility of the relative price of its currency and how these choices differ for higher income and lower income economies. Third, the course examines exchange rates as a source and conduit of global financial instability. Fourth, the course focuses on the risk and exposure for investors and firms arising from exchange rate market volatility. It examines the valuation of currency instruments and their use in strategies to hedge that exposure. It also analyses the structure, trading and organisation of the forex market and its central role in international finance.

The course incorporates theoretical, empirical, policy and institutional dimensions. The teaching approach emphasises the intuitions at the core of the quantitative aspects. It also discusses how the historical evolution of research in this area has resulted in the currently used theoretical frameworks.

20 hours of lectures and 10 hours of seminars in the LT.

Students are required to undertake a group research project on a given topic in international finance.

A selection of journal articles; background reading from a textbook such as Keith Pilbeam International Finance (Palgrave, 2013, 4th edition)

Exam (80%, duration: 2 hours) in the summer exam period.
Research project (10%) and continuous assessment (10%) in the LT.

Continuous assessment takes the form of class preparation throughout the teaching term and is worth 10%.