EXCHANGE RATE BEHAVIOR
Code -FIN5IFM assignment help
Subject- EXCHANGE RATE BEHAVIOR assignment help
You are required to analyze the mean, median, and volatility of each data series. You are required to use graphs for meaningful visualization of your data series.
Examining the Behavior of the Exchange Rate
Present a meaningful economic explanation of the trend of the AUD/USD spot exchange rate. What are the main factors that explain the changes in the value of the Aussie dollar against the USD during the last five years? You are required to use the relevant factors that explain the variation in the exchange rates. These include economic factors – trade and finance related, government intervention, political factors, government policy regulations, etc. You are expected to spend significant time in this section.
Evaluating the Future Exchange Rate
Examine the trend of spot exchange rate and future exchange rate. Do you find any links between these two rates? Identify whether the future exchange rate includes a discount or premium for each monthly period (total 60 months)? Present your result in a table or a graph. Note that while forward rates and future rates are not the same, you can use these terms interchangeably for this assignment for the data limitation mentioned earlier.
Testing IRP, PPP, and IFE
Using the last five years (60 data points), examine whether IRP, PPP, IFE holds. Present your result in tabular and graphical form. What are the implications you can draw from your analysis about potential actions by market participants (MNCs, Banks, forex traders)?