International Trade & Investment, Spring 2019
Foreign Exchange Exercise
http://fx.sauder.ubc.ca/.
EXHIBIT 1: Country Groups for Foreign Exchange Exercise
U.S Neighbors &
Major Trading
Partners Group
(Group 1) Africa
Group
(Group 2) Caribbean
Group
(Group 3) Middle East & Asia
Group
(Group 4) Oceania
Group
(Group 5) South America
Group
(Group 6)
Canada
Morocco
Barbados
Israel
Australia
Argentina
China
Egypt
Jamaica
Indonesia
Fiji
Brazil
European Union (Single Currency Zone)
Ghana
Trinidad and Tobago
Jordan
New Zealand
Chile
India
Nigeria
Kazakhstan
Colombia
Japan
Kenya
Malaysia
Costa Rica
Mexico
South Africa
Philippines
Peru
Russia
Tanzania
United Arab Emirates
(UAE)
Venezuela
Using a Google or other search engine, visit the web site below:
Pacific Exchange Rate Service at: http://fx.sauder.ubc.ca/ operated by the Sauder School of Business, University of British Columbia, Canada. This assignment is based on the above website.
Q1. Select two (2) countries one each from two of the country groups (from Group 1 through Group 6) in EXIBIT 1 on page 1 above:
a) Identify the currencies of the two countries by name
b) The exchange rate of the two currencies expressed in terms of US dollar per X currency (called the direct quote or price notation) and the exchange rate expressed in terms of X currency per domestic, US dollar (indirect quote or volume notation)
Q2. a) From the above website, use the Plot Interface function to create a chart for each of the two currencies between two time periods. Attach the charts to your paper.
b) From the charts, describe the movements or trends of the exchange rates during the period. Make a general statement comparing the two currencies, in terms of their strengths or weaknesses against the dollar between April 21, 2021 to April 21 2022,
c) What impact, all things being equal, would each currency have had on trade (exports and imports) between the U.S and the two countries?
Give one example of impact on: a) exports and one example on b) imports
Q3. a) From your charts or based on a quick search, what type of exchange rate system are the two currencies operating on? Explain briefly.
b) Imagine that you are the Global Market Expansion Manager of a company located in each of the two countries? Which of the exchange rate systems existing in the two countries would you prefer to operate in? Explain, in terms of foreign exchange risk or exposure.