Английский язык. Бочкарева Т.С - 12 стр.

time, for example, a forward deal enables it to protect itself against future adverse
movements in the exchange rate which would have otherwise had the effect of making
the foreign goods more expensive.
      When dealing in foreign exchange, normally by telephone, the bank quotes both the
selling and buying rate of a currency at which it is prepared to transact business.
Settlement for a spot transaction is two working days later. Thus if a contract is made
on Monday, the seller delivers the amount sold and receives payment on Wednesday.
Similarly if the contract is made on Tuesday, value is Thursday.
      Currency traded in this way is delivered to the buyer's account with a bank in the
main centre, or one of the main centres, for the currency in question. In the case of
sterling, for example, this is London, for Dutch guilders it is Amsterdam and Rotterdam,
and for Belgian francs it is Brussels and Antwerp. The buyer decides the bank where
his or her account is to be credited.
      The foreign exchange dealer fills in a dealing slip containing basic information
such as the date and time of the deal, the contracting party, the amount and rate
agreed on, the date of settlement, and the place of delivery of the currency dealt in. As
soon as a foreign exchange transaction has been carried out, both banks send a written
confirmation containing the basic information mentioned above. Any discrepancies may
thus be detected quickly.
      A bank holding debts or claims in a foreign currency is itself exposed to an
exchange risk, unless the debts and claims neutralize each other by being of equal size
and by having roughly the same maturity dates. Dealers therefore aim for a balanced
total position. If the amount of bank's claims in dollars, for example, is larger than the
total debts in dollars, then the bank has a long position, but if the debts are larger than
the claims, the bank is short in dollars. As long as the total position balances, there is no
risk for the bank.

     Comprehension Questions

    1 What does foreign exchange dealing mean?
    2 How will you explain the term "rate of exchange"?
    3 Why do many companies need foreign currencies?
    4 In what currency does a British company pay an invoice from the German
company?
    5 How does a bank make a profit buying and selling currencies?
    6 What are the terms for immediate delivery of currency and its delivery later?
    7 Why is a forward deal useful for companies? What does this deal protect a
company against?
    8 Who decides the bank where the account is to be credited?
    9 What documents does a foreign exchange dealer fill in?
    10 What kind of information does a dealing slip contain?

12