International Finance

Author: Shi Yuxing, Editor-in-Chief
Publisher:
Publish Date: 2003-11-01
Features: Years of international finance teaching practice have shown us that learning international finance can still be challenging. To help students overcome learning difficulties, this book adopts the following methods: (1) Strives for simplicity and provides examples to illustrate many issues; (2) Focuses on connecting new phenomena and problems in the financial field to understand their essence; (3) Lists review questions at the end of each chapter. From the students' perspective, we hope that students will integrate and compare while studying, rather than just memorizing concepts and rules from the textbook. They should identify the similarities and differences between two related concepts. For example, exchange rate overvaluation (also known as overvaluation of the domestic currency) and exchange rate undervaluation (also known as undervaluation of the domestic currency). Through comparison, we will find that their similarities are that both are measures taken by a country's monetary authority to achieve its exchange rate policy goals. The differences are: (1) Different methods: Exchange rate overvaluation is achieved by the monetary authority through artificial means (foreign exchange controls or market intervention) to overestimate the actual value represented by the domestic currency, making the exchange rate higher than the actual rate, while exchange rate undervaluation is the opposite; (2) Different economic impacts and roles: Exchange rate overvaluation is beneficial to import trade and capital outflow, while exchange rate undervaluation is the opposite; (3) Different roles in helping developing countries achieve their economic development strategies: Exchange rate overvaluation is beneficial for implementing an import-substitution economic development strategy, while exchange rate undervaluation is beneficial for implementing an export-oriented economic development strategy.