INTERNATIONAL PAYMENT IN
TRAVEL AND TOURISM
Group 4

Nguyễn Thị Huyền
Trang

Hoàng Thị Minh Ngọc

Lê Thị Loan

Nguyễn Thị Thùy Linh

Đào Thị Thanh Xuân
Discussion question:
Analysis the risk by the foreign
exchange on FOREX
Contents
Contents
1. Exchange rate risk
2. Interest rate risk
3. Credit risk
4. Dictatorship
risk/Country risk
Contents
1. Exchange rate risk
What is the FOREX?

International currency market
•
A special kind of the world financial market

position
1. Exchange rate risk
What is it?
How it works
Position limit
Loss limit
•
Quite substantial
•
Based on the
market’s perception
of which way the
currencies will move
at anytime &
anywhere in the
world
1. Exchange rate risk
What is it?
How it works?
Position limits
Assessing
Establishing the
maximum amount
of any currency at
which a trader is
allowed to carry,
at any single time.
1. Exchange rate risk
What is it?
How it works?


Refers to the profit and loss generated by
fluctuations in the forward spreads, along with
forward amount mismatches and maturity gaps
among transactions in the foreign exchange book.

To minimize interest rate risk, one set limits on the
total size of mismatches. A common approach is to
separate the mismatches, based on their maturity
dates into up to six months and past six months.
2. Interest rate risk

The central bank's interest rate changes
periodically to manage the economy and as
such, the interest rate differential is also
changing rapidly.

This change is rare and a large interest rate
cuts never occur rapidly but slowly, step by
step. That is why traders should keep an eye
on the interest rate change of currency if
they want to pursue a long-term investment
strategy.
2. Interest rate risk
3.Credit risk
What is it?
Replacement risk
Settlement risk
Possibility that an
outstanding

Zealand Dollars are
credited first, then the
Japanese Yen, followed by
the European currencies
and ending with the US
Dollar
4. Dictatorship risk/country risk

Dictatorship (sovereign) risk refers to a
government's interference in the Forex
marketplace.

Although theoretically present in all
foreign exchange instruments - currency
futures are, for all practical purposes,
exempt from country risk, for the reason
that the major currency futures markets
are located in the US.
4. Dictatorship risk/country risk

However, traders must account for all
types of risk and take the necessary
measures to account for possible
administrative restrictions that may
affect their market positions.