Lecture Business finance - Chapter 21: International financial management

Chapter 21 International Financial Management Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 21–1 Prepared by Dr Buly Cardak Learning Objectives • Understand the importance of international transactions for the Australian economy. • Read, interpret and use foreign exchange rates. • Understand the roles of interest rates and inflation rates in exchange-rate determination. • Understand the empirical evidence on the behaviour of exchange rates. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 21–2 Prepared by Dr Buly Cardak Learning Objectives (cont.) • Understand the techniques that can be used to manage exchange risk. • Explain the advantages of international diversification of investments. • Identify the characteristics and uses of currency swaps. • Identify the main sources of foreign currency borrowing used by Australian companies. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 21–3 Prepared by Dr Buly Cardak Background Statistics • International trade now represents about 20% of Australia’s gross domestic product: EXPORTS YEAR $Ab % IMPORTS $Am % 1988/89 55.4 15.8 1992/93 76.9 18 1996/97 105.2 19.7 1997/98 113.7 20.1 1998/99 111.9 18.8 1999/2000 125.9 19.9 2000/2001 153.9 22.9 2001/2002 153.3 21.5 2002/2003 148.5 19.7 62.3 17.7 79.1 18.5 103.6 19.4 118.5 21 126.5 21.2 140.3 22.2 153.2 22.8 154.6 21.6 167.2 22.2 Table 21.1, Source: Reserve Bank of Australia, Bulletin. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 21–4 Prepared by Dr Buly Cardak Background Statistics (cont.) • Historically, Australia has been a net importer of capital. – Levels of foreign investment in $A billion: non-official sector: PORTFOLIO TOTAL DIRECT AND NON- PORTFOLIO TOTAL DIRECT AND NON- DATE NVESTMENT OTHER OFFICAL INVESTMENT OTHER OFFICAL 30 June 1989 91.2 30 June 1992 109.8 30 June 1996 147.7 30 June 2000 216.9 30 June 2001 222.7 30 June 2002 234.7 30 June 2003 254.8 143.3 234.5 201.3 311.1 272.0 419.4 472.1 689.0 578.9 801.6 585 819.7 606.1 860.9 44.3 35.0 79.3 51.2 52.2 103.4 81.6 80.9 162.5 190.5 150.3 340.8 204.7 209.6 414.3 177.7 225.6 403.3 178.6 221.5 400 Table 21.2, Source: Reserve Bank of Australia Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 21–5 Prepared by Dr Buly Cardak ... - tailieumienphi.vn