The unit analyses nominal and real exchange rates and it evaluates their impact, together with those of international interest rate changes, on the decisions of corporate, institutional and government managers. We also attempt to explain the behaviour of currency rates in terms of their determinants. The hedging of currency risks associated with international trade, overseas investments and foreign borrowing through a range of derivatives such as currency futures, options, swaps, value at risk models and stress testing will be extensively discussed. Case studies dealing with typical international financial decisions of corporate companies help to bridge the gap between theory and finance sector practices. They foster active learning, exercise critical thinking, model the analytical mindset of professionals and hone report-writing skills.
Case studies are thus an indispensable tool in preparing graduates for effective professional work.