On successful completion of the course, students will be able to:

- be aware of exchange rate dynamics
- comprehend the basic theories of the foreign exchange
- explain the causes and consequences of exchange rate
fluctuations
- analyze the impacts of economic policy on exchange rate
evaluate the efficiency of foreign exchange market
- evaluate and forecast exchange rates

Purchasing Power Parity. Covered and Uncovered Interest Rate Parity. Currency and interest rate arbitrage. Efficiency of foreign and forward foreign exchange market. Rational expectations in currency market. Risk premium in foreign exchange market. Traditional macro models for exchange rate determination: Monetary model, Dornbusch overshooting model, portfolio balance model. Exchange rate regimes. Empirical testing of foreign exchange models. Basics of microstructure in foreign exchange. Some recent topics in foreign exchange.

Lectures will be recorded and can be watched via password protected intranet site. Have a look at the link above to Homepage URL. Enrollment key hase been sent to registered participants by email. If you did not receive this email to your uta.fi account, please send email to markku.konttinen(at)uta.fi Further information on course: https://korppi.jyu.fi/kotka/course/student/generalCourseInfo.jsp?lang=1&compress=true&course=170156&javascript-enabled=true

Literature
Copeland, L. 2005. Exchange Rates and International Finance. 4th Edition. (or newer)
Cuthbertson, K. & Nitzsche, D. 2004. Quantitative Financial Economics, Stocks
Bonds and Foreign Exchange. 2nd Edition, Chapters 24–27.
Supplementary reading list is provided in the course.

Course includes an exam and an essay work: up to 3 points in the final exam (3/30), valid in the final exam and retake exam. Essay must be submitted before particiopating the exam. Finnish students may write the essay and answer in the exam also in Finnish, if they want. For further instructions have a look at the instructions document at course home page.

First course exam: Fri Oct 31 at 12-3 p.m. main building D11
Retake exam: Fri Nov 28 at 12-3 p.m. Pinni B4113