Лекции по английскому языку для изучающих банковское и финансовое дело. Лекции по английскому языку для изучающих банковское и финансов. Составитель Н. А. Самуэльян

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Unit Nine Foreign Exchange

Active Vocabulary

aptly

capital movements

claim

conclude (v)

conversion

convertibility

current transactions

dealer

dealings

domicile (v)

- соответствующим образом,
быстро, легко

-движение капитала

-требование, претензия

-заключать

-конверсия

-конвертируемость

-текущие сделки

-дилер, посредник

-коммерческие сделки

-обозначать место платежа по
векселю


Eurodollar market

excess funds

foreign exchange

money movements

non-resident
partial convertibility

place
two-tier market


two-tier market
международный евродолларовыи рынок

-избыточный капитал

-иностранная валюта

-движение денег

-нерезидент

-частичная конвертуемость

-размещать, выпускать на рынок

l

Foreign Exchange

International trade and more important international money and capital movements are the basis of foreign ex­change dealings. Take a simple example: if a Swiss exporter sells a machine to a Japanese buyer, to conclude the transac­tion the yen which the Japanese businessman has available will have lo be changed into Swiss francs, the currency sought by the supplier of the machine. Or if Continental banks want to place excess funds in the Eurodollar'market ralher than in Iheir own domestic, markets, they have lo buy dollars against local currency. The observation of the French economist Gaelan Pirou, that foreign exchange deals spring from "tbe coexistence between Ihe internationalism of trade and the nationalism of currencies", thus aptly descrilxjs at least the oldest origin of this metier. Clearly, the day that sees the arrival of a single world currency will also witness the disap­pearance of foreign exchange business.

All claims to foreign currency and payable abroad, whether consisting of funds held in foreign currency with banks abroad, or bills or cheques, again in foreign currency and payable abroad, arc termed foreign exchange. All these claims play a part in Ihe relations between a bank and its customers. In the trading of foreign exchange between banks_r which is the job of the foreign exchange dealer, only foreign currency held with banks abroad is concerned.

Foreign bank notes are not foreign exchange in the nar­rower sense. They can be converted into foreign exchange, however, provided they can be placed without restriction lo the credit of an ordinary commercial account abroad. The exchange regulations of some countries do not allow this con­version of bank notes into foreign exchange, although the operation in reverse is nearly always permitted.

A currency, whether in foreign exchange or bank notes, is usually (railed eonvertible if the person holding it can con­vert it, in other words change it freely into any other cur-


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rency. A distinction needs to be made, however, between unrestricted convertibility and the various forms of partial convertibility. The Swiss franc, for example, is fully con­vertible whether the holder is resident in Switzerland or abroad and regardless of whether it is a matter of current payments or financial transactions.

Many countries, on the other hand, recognize only exter­nal or non-resident convertibility. This is for instance still the case with the United Kingdom: if a German exporter, for ',, example, has sterling funds in a British bank, he can simply -^: instruct the bank to convert his pounds into any other cur- ^ rency and remit the proceeds abroad; but a person domi- f, ciled in Britain cannot as a general rule export capital ex- ^ cepl with the consent of the Bank of England.

Exchange regulations may also draw a distinction, as far as convertibility is concerned, between funds arising from current transactions (goods and services) and those coining from purely financial operations, only the latter in general being subject in some degree to a restriction on convertibil­ity. In a few countries this distinction between commercial and financial transactions culminated in the establishment of two-tier markets, this is the case in Belgium, and it ap­plied temporarily to France and Italy in recent years.

Exercises to the text

I

Find the proper answer:

1. "foreign exchange dealings":

1. 
   financial operations connected with settling payments
   in foreign trade as well as international money and capi­
   tal movements,
   
2. 
   concluding agreements with foreign firms,
   
3. 
   converting one currency into another.
   

2."the yen which the Japanese businessman has available":

1. 
   wants to exchange,
   
2. 
   has in abundance,
   
3. 
   has at his disposal.
   

3. "foreign exchange deals spring from":

1. 
   refer to,
   
2. 
   are the result of, -*
   
3. 
   imply.
   

4. "placed to the credit of:

1. 
   entered on the credit side of an account,
   
2. 
   considered to be favourable for, \
   
3. 
   a credit granted to. \
   

5. "the operation in reverse": Y

1. 
   conversion of foreign exchange into the currency of a
   given country, <
   

1. 
   conversion of bank notes into foreign exchange,
   
2. 
   remitting bank notes abroad.
   

6. "a currency is usually called convertible":

1. 
   only residents of a country can remit their payments
   abroad,
   
2. 
   it can be changed into any other currency without any
   restrictions, \
   
3. 
   non-resident can instruct the bank to convert their earn­
   ings into any other currency.
   

7. "a person domiciled in Britain":

1. 
   one being on a business trip,
   
2. 
   one living permanently in,
   
3. 
   one touring the country.
   

8. "the proceeds":

1. 
   money arising from converting one currency into
   another,
   
2. 
   earnings from the export of goods,
   
3. 
   foreign currency held with banks abroad.
   

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95

9. "except with the consent of the Bank of England":

1. 
   provided you apply for a permission to the Bank of
   England,
   
2. 
   only in case the Bank of England grants a permission,
   

c) only if one has an account with the Bank of England.
1.0. "the latter":

1. 
   funds arising both from current transactions and finan­
   cial operations,
   
2. 
   funds arising from current transactions,
   
3. 
   funds arising from purely financial operations.
   

11. "being subject to a restriction on convertibility":

1. 
   being externally convertible,
   
2. 
   being freely convertible,
   
3. 
   being under control of exchange regulations.
   

12, "two-tier markets":

1. 
   economies which draw distinctions between current
   transactions and financial operations as regards ex­
   change regulations,
   
2. 
   two-storey department stores,
   

c) oeonomies permitting free money and capital move­
ments.

6. 
   A person domiciled in Britain can as a general rule ex­
   port capital only wilh the consent of the Bank of En­
   gland.
   
7. 
   In Belgium funds arising from current transactions are
   subject to a restriction on convertibility.
   

Ill

Answer the following questions:

1. 
   What is the basis of foreign exchange dealings?
   
2. 
   What would a Japanese buyer have to do if he wanted to
   purchase a machine from a Swiss exporter?
   
3. 
   What would happen to foreign exchange dealings if a
   single world currency were created?
   
4. 
   How would you define "foreign currency''?
   
5. 
   What is the job of a foreign exchange dealer?
   
6. 
   On what condition do foreign bank notes liecome foreign
   exchange?
   
7. 
   What is a fully convertible currency?
   
8. 
   What is a partially convertible currency?
   
9. 
   Give examples of currencies which are fully convertible
   and partially convertible.
   

II

Say what is true and what is false. Correct Hie. false, sen te,nce.s:

1. 
   To facilitate foreign exchange dealings single world cur­
   rency should be created.
   
2. 
   In the trading of foreign exchange between banks only
   foreign currency held with banks abroad is concerned.
   

1. 
   Foreign bank notes are foreign exchange.
   

3. 
   The conversion of foreign exchange into bank notes of
   the given country is nearly always permitted.
   
4. 
   The holder of Swiss francs can convert them into other
   currencies provided he is a resident of Switzerland.
   

IV

Vocabulary study. Supply the missing member of the, pair in each case:

Verb	Noun
to move to exchange to convert	supplier dealer, dealings restriction
to permit to instruct	establishment disappearance

96

4 1619

97




Collocation. Find the nouns which are qualified in the text
by these adjectives and write one. noun to each adjective:
convertible international

current local

domestic ordinary

external partial

financial unrestricted

foreign

VI

Combine the. words listed below into meaningful two or
three word expressions as possible. Some are used in Hie
text (capital movement, foreign exchange dealings).
business foreign

bank money

capital movement

currency market

dealings notes

dealer regulation

exchange two-tier

Eurodollar world

VII

For each of the following phrases find the expression in the text which it explains and note, that expression.

1. 
   International trade and international money and capital
   movements.
   
2. 
   Extra money held by a bank.
   
3. 
   Money used within a country.
   
4. 
   Money in circulation abroad.
   
5. 
   Funds, bills, cheques held with banks abroad in foreign
   currency and payable abroad.
   

6. 
   A currency that can be changed freely into any other
   currency.
   

6. 
   Money coming from the sale of goods and services.
   

VIII

Complete the following sentences in English:

1. 
   If a bank wants to place excess funds in the Eurodollar
   market
   
2. 
   Foreign bank notes can become foreign exchange provided
   
3. 
   A currency is called convertible if \
   

4. 
   Sterling funds are partially convertible because only
   
5. 
   In Belgium, France and Italy a distinclio\i is drawn be­
   tween \
   

IX

Demonstrate the meaning of each of the following expres­sions in sentences of your own:

1. 
   to conclude the transactions ,-— '" ' '
   
2. 
   to place excess funds [
   
3. 
   to buy dollars against local currency
   
4. 
   to convert into
   
5. 
   to remit the proceeds abroad
   
6. 
   to export capital
   
7. 
   to be subject to a restriction
   
8. 
   to be fully (partially) convertible
   

X

In the sentences of this text every sixth word has been left out. Write in the word that fits best:

The Foreign-Exchange market is market which has

no central place, but operates through the offices of

the banks concerned overseas trade. The main preoccu-


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99

pation the foreign-exchange dealers is secure sup­
plies of foreign currency required lo finance interna­
tional trade price of foreign currencies, like prices,

is determined by the for that currency and the of it.

The demand for currency depends on the demand

that country's goods and services foreigners, and the

supply of currency depends on how many goods and

services its home wish to buy. Capital movements

also affect the exchange rale making supplies of a cur­
rency on lorig-lerm loans or

Unit Ten

Banks and the Foreign Exchange Market

Active Vocabulary

arbitrage assets

cross rate

foreign exchange market

forward rale

forward transaction

incessantly

inevilably

intermediary

market rate

spot rate

spol transaction supply

• 
  арбитраж
  

• 
  имущество, средства, активы,
  капитал, фонды
  

• 
  кросс-курс
  
• 
  валютный рынок
  
• 
  форвардный валютный курс
  

• 
  форвардная (срочная) сделка
  
• 
  непрерывно, постоянно
  

• 
  неизбежно
  
• 
  посредник /-^
  
• 
  посредник \
  
• 
  курс "енот", курс, но кассовым
  сделкам
  
• 
  сделка на наличный товар
  

— предложение .

Banks and the Foreign Exchange Market

The banks are the natural intermediary between foreign exchange supply and demand. The.main task of a bank's foreign exchange department is to enable its commercial or financial customers to convert assets held in one cvirrency into funds of another currency. This conversion can take the form of a spot transaction or a forward operation. Banking activities in the foreign exchange field tend inevitably to es­tablish a uniform price range for a particular currency

101

throughout the financial centres of the world. If at a given moment the market rate in one centre deviates too far from the average, a balance will soon be restored by "arbitrage", which is the process of taking advantage of price differences in different places. It can be seen that foreign exchange busi­ness acts as a very important regulator in a free monetary system.

Only the big banks and a number of local banks specializ­ing in this kind of business have a foreign exchange depart­ment with qualified dealers. Banks which merely carry out their customers' instructions and do no business on their own account do not really require the services of a foreign exchange expert. For these it will be sufficient to have some­one with a general knowledge of the subject because his role in practice will be that of an intermediary between the cus­tomer and a bank professionally in the market.

A foreign exchange dealer acquires his professional skill largely through experience. Here we should point out how important close cooperation is among a team of dealers. The group can work together smoothly only if each member is able to shed his individuality. We must not forget that, al­most incessantly, all the dealers are doing business simulta­neously on different telephones and when large transactions are completed the rates may change, whereupon the other dealers must be brought up-to-date immediately. It is essen­tial for a dealer to have the knack of doing two things at once so that he can do business on the telephone and at the same time take note of the new prices announced by his colleagues.

Professional foreign exchange dealing requires advanced technical equipment. Business is done by telephone (with many direct lines to important names) and teleprinter de­pending on distance and convenience. Spot and forward rates of the most important currencies and money market rates are displayed on a big rate board, remote-controlled by the chief dealers. Electronic data processing equipment is em-

ployed to keep track instantly of the exchange positions and for the administrative handling of the business done. Cross rates are figured out with the help of electronic table calcu­lators.

I -----------------

Using the words in brackets as a guide, explain the mean­ing of the following terms and phrases: j

1. 
   foreign exchange supply (the total amount of, available,
   at a given price) •
   
2. 
   foreign exchange demand (the total amount of, required)
   
3. 
   foreign exchange (foreign bank notes, placed without re­
   strictions, to the credit of, abroad)
   
4. 
   spot transaction (are traded, goods or securities, for im­
   mediate delivery)
   
5. 
   forward transaction (in the future, at fixed dates, at fixed
   prices, to supply currencies)
   
6. 
   market rate (a fixed ratio between)
   

.
Find the proper answer:^v .

1. "to convert into":

1. 
   to supply,
   
2. 
   to carry out,
   
3. 
   to change into.
   

2. "to establish a uniform price range '^r :

1. 
   to set the limits within which the price varies,
   
2. 
   to take advantage of price differences,
   
3. 
   to differentiate prices.
   

3. "to deviate from the market rate":

1. 
   to announce new market rates,
   
2. 
   to turn away from the market rate,
   
3. 
   to differ from the market rate.
   

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103

4. "to restore a balance":

1. 
   to bring back into a former position,
   
2. 
   to take advantage of price differences,
   
3. 
   to rebuild the economy.
   

5. "to do business on your own account":

1. 
   not to cooperate with a team of dealers,
   
2. 
   to settle accounts on your own,
   
3. 
   to do business for one's own profit or advantage.
   

6J "dealers must be brought up-to-date":

1. 
   acquainted with the recent methods of marketing,
   
2. 
   notified immediately about any changes in market rales,
   
3. 
   alarmed by any changes in market rales.
   

7. "to have a knack of doing Iwo Ihings al a lime":

1. 
   lo be able to do two Ihings simultaneously,
   
2. 
   lo conducl Iransaclion by lelephone or cable,
   
3. 
   lo get in touch with two people at a time.
   

8. "tokeeplrackof":

1. 
   lo use advanced lechnical equipmenl,
   
2. 
   lo keep in louch with,
   
3. 
   lo figure oul cross rales.