International finance: Meaning, Importance; emerging challenges; recent changes in global
financial markets; foreign exchange markets; exchange rate definitions; spot and forward
rates; alternative exchange rate regimes.
Exchange rate determination: theories and models of exchange rate; purchasing power parity
theory; asset market model; current account monetary model; capital account monetary
model, portfolio balancing model, exchange rate of rupee; recent trends; convertibility of
International monetary system; brief history; features; present exchange rate system reforms
of international monetary system; European monetary system; a not an international debt;
ADB, IBRD and IMF: functions; special schemes of lending, conditionalities of IMF lending;
IMF role international liquidity; SDRs, international financial markets and instruments.
Balance of payments; meaning; accounting principles; valuation and timing; components;
deficit and surplus; macro economic factors affecting exchange rate – some open economy
identities; open economy multipliers, SWIFT and Inter bank clearing among banks in different
Currency derivatives:- futures, options and swaps; currency futures and currency forwards;
swap market; currency swap; interest swaps; swap agreement.
Exchange rate risks and risk management tools; Hedging, forward deals.
MCom (Masters in Commerce) Subjects