| Preface | p. xv |
| Foreign Exchange and Money Markets | p. 1 |
| Who's Who in the Markets | p. 3 |
| Money market | p. 4 |
| What the money market is | p. 4 |
| Actors in the money market | p. 4 |
| Foreign money market | p. 8 |
| Why a Eurodollar market? | p. 9 |
| Actors in the foreign money market | p. 11 |
| Foreign exchange market | p. 11 |
| What the foreign exchange market is | p. 11 |
| Actors in the foreign exchange market | p. 13 |
| Interest Rates and Foreign Exchange Rates | p. 19 |
| Rates in the money market | p. 19 |
| Rates in the foreign money market | p. 22 |
| Spread between rates on domestic and Eurocurrency deposits | p. 23 |
| Revolving Euroterm loans | p. 25 |
| Rates in the foreign exchange market | p. 30 |
| Meaning of exchange quotations | p. 30 |
| Reciprocal rates | p. 31 |
| Cross rates | p. 34 |
| The chain | p. 35 |
| Price and volume quotations | p. 36 |
| Problems | p. 38 |
| Interactions between the Markets | p. 51 |
| The nature of cash flows | p. 51 |
| Value dates | p. 54 |
| Eligible value dates | p. 55 |
| Spot value dates | p. 57 |
| Forward value dates | p. 57 |
| Interactions between the money and foreign exchange markets | p. 59 |
| Operating in the money market | p. 61 |
| Operating in the foreign exchange market | p. 61 |
| Money market or foreign exchange market | p. 66 |
| Problems | p. 73 |
| Two-Way Markets: Bid and Offer Rates | p. 82 |
| Rates in the money market | p. 83 |
| Rates in the foreign exchange market | p. 84 |
| Meaning of exchange quotations | p. 84 |
| Reciprocal rates | p. 86 |
| Cross rates | p. 87 |
| Some comments on quotations | p. 92 |
| How can you evaluate the quality of a quotation? | p. 92 |
| Information content of quotations | p. 93 |
| Problems | p. 95 |
| Funds Management in a Two-Way Market | p. 101 |
| Swap rates | p. 101 |
| What are swap rates? | p. 101 |
| Bid and offer in the swap rate | p. 103 |
| Swap transactions | p. 104 |
| Swap transactions with matched cash flows: Covered interest arbitrage | p. 107 |
| Swap transactions with mismatched cash flows | p. 109 |
| Problems | p. 119 |
| Factors Affecting Spot Exchange Rates | p. 122 |
| The economics of international transactions | p. 123 |
| Trade in merchandise | p. 123 |
| Trade in services | p. 126 |
| Unilateral transfers | p. 126 |
| Capital account | p. 126 |
| Official reserves | p. 128 |
| Structure of the balance of payments | p. 129 |
| The determinants of exchange rates | p. 131 |
| The balance of payments approach | p. 131 |
| Purchasing power parity | p. 132 |
| Market expectations | p. 133 |
| International monetary system | p. 136 |
| Factors Affecting Interest Rates | p. 140 |
| The level of interest rates | p. 140 |
| Supply and demand for funds | p. 141 |
| Changes in the money supply | p. 141 |
| The shape of the yield curve | p. 143 |
| Market expectations | p. 144 |
| Other factors | p. 146 |
| Creditworthiness and market liquidity | p. 148 |
| Problems and Opportunities in the Treasury Department | p. 153 |
| Operations in the Trading Room | p. 155 |
| Basic operations in the market | p. 155 |
| Taking advantage of disequilibrium situations: Covered interest arbitrage | p. 155 |
| Taking advantage of expected changes in interest rates | p. 160 |
| Rolling over a net exchange position | p. 165 |
| Catering to customers' needs in the forward market | p. 169 |
| Getting out of an exchange position | p. 169 |
| Creating a forward exchange market | p. 174 |
| Computing the effective yield or cost of funds | p. 182 |
| The value of float | p. 182 |
| All-in cost of exchange transactions | p. 183 |
| Cost of foreign currency deposits | p. 184 |
| Central banks' interventions in foreign exchange markets | p. 186 |
| How not to do it | p. 187 |
| Intervention to achieve domestic objectives | p. 189 |
| Intervention to support the spot rate | p. 190 |
| Problems | p. 194 |
| Funds Management in the Exchange Market | p. 213 |
| Borrowing and investing without an exchange position | p. 214 |
| Raising needed funds in a given currency | p. 214 |
| Investing available funds in a given currency | p. 214 |
| Another example | p. 216 |
| Borrowing and investing with an exchange position | p. 219 |
| Managing opposite cash flows in different currencies | p. 229 |
| Cash flows take place immediately | p. 229 |
| Cash flows will take place in the future | p. 231 |
| Funds management under exchange controls | p. 236 |
| Investing local funds under capital inflow controls | p. 236 |
| Borrowing foreign funds under capital outflow controls | p. 238 |
| Currency diversification and liquidity in a portfolio | p. 244 |
| Problems | p. 246 |
| Funds Management in the Money Market | p. 259 |
| Money market instruments in the United States | p. 260 |
| U.S. Treasury bills and other government securities | p. 260 |
| Federal funds | p. 261 |
| Certificates of deposit | p. 264 |
| Commercial paper | p. 268 |
| Repurchase agreements | p. 268 |
| Bankers' acceptances | p. 270 |
| Futures market for money market instruments | p. 272 |
| Money market funds | p. 274 |
| Comparing rates in the money market | p. 275 |
| Comparing market rates | p. 275 |
| Comparing lending rates | p. 279 |
| Typical money market operations | p. 282 |
| Liquidating an instrument before maturity | p. 282 |
| Tail-end gapping (riding the yield curve) | p. 283 |
| Spread trading (arbitrage) | p. 285 |
| Taking advantage of anticipated changes in interest rate levels | p. 288 |
| Hedging interest rate positions | p. 290 |
| Cash-flow management and the relationships among financial markets | p. 292 |
| Problems | p. 294 |
| Financing Commercial Transactions | p. 297 |
| Hedging the net exchange position created by trade | p. 299 |
| Financing trade after sale is realized | p. 304 |
| Finacing trade when order is received | p. 308 |
| Hedging alternatives in controlled exchange markets | p. 313 |
| Cross-currency hedging | p. 314 |
| A mutual indemnification agreement | p. 315 |
| Problems | p. 320 |
| Managing Exposure to Exchange Risk | p. 327 |
| Exposure: Cash flows versus accounting conventions | p. 327 |
| Hedging cash-flow exposures | p. 332 |
| Hedging in the forward market | p. 334 |
| Hedging in the money market | p. 334 |
| Hedging balance-sheet exposures | p. 339 |
| Hedging in the financial markets | p. 339 |
| Modifying the balance sheet | p. 342 |
| Problems | p. 346 |
| Controlling Treasury Operations | p. 351 |
| Accounting for Treasury Operations | p. 353 |
| Accounting for money market operations | p. 353 |
| Recording money market transactions | p. 353 |
| Measuring profits in money market operations | p. 356 |
| Bookkeeping for money market operations | p. 361 |
| Accounting for foreign exchange operations | p. 364 |
| Recording foreign exchange transactions | p. 364 |
| Measuring profits in foreign exchange operations | p. 366 |
| Bookkeeping for foreign exchange operations | p. 373 |
| Accounting for joint exchange and money market transactions | p. 374 |
| Covered interest arbitrage | p. 375 |
| Creating a forward exchange market | p. 378 |
| Exchange transactions with all-in price quotes | p. 379 |
| Loan financing through swaps | p. 381 |
| Risks in Treasury Operations | p. 386 |
| Credit risk | p. 386 |
| Credit risk in the money market | p. 387 |
| Credit risk in the foreign exchange market | p. 387 |
| Sovereign risk | p. 389 |
| Rate risk | p. 389 |
| Rate risk in the money market | p. 389 |
| Rate risk in the foreign exchange market | p. 390 |
| Liquidity risk | p. 391 |
| Liquidity risk in the money market | p. 391 |
| Liquidity risk in the foreign exchange market | p. 392 |
| Evaluation of comparative risks | p. 393 |
| Comparative credit risks | p. 396 |
| Comparative rate risks | p. 397 |
| Comparative liquidity risks | p. 397 |
| Overall assessment | p. 398 |
| Problems | p. 398 |
| Control of Treasury Operations | p. 401 |
| Credit risk | p. 401 |
| Credit risk in the money market | p. 401 |
| Credit risk in the foreign exchange market | p. 402 |
| Sovereign risk or cross-border risk | p. 404 |
| Rate risk | p. 405 |
| Changes in interest rates | p. 405 |
| Changes in exchange rates | p. 405 |
| Liquidity risk | p. 406 |
| The cash-flow report | p. 407 |
| The liability-mix report | p. 414 |
| Miscellaneous controls | p. 417 |
| Aggregate limits | p. 417 |
| Confirmations | p. 418 |
| Protection against fraud | p. 418 |
| Appendix | p. 420 |
| Bibliography | p. 421 |
| Glossary | p. 425 |
| Index | p. 447 |
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