Forecasting Currencies
INDIVIDUAL ASSIGNMENT
FIN 542
Submitted to:
SIR AHMAD HUSNI
Prepared by:
NURUL AIDA BINTI MD RASHID
BM222 4A
2012824256
Question: Examine data from the website www.oanda.com, USD, pound, and euro for one month of April 2013 until May 20th 2013(obtained from historical exchange rate) and discuss comment the fund for the period. What is your forecast for these currencies for the month of June 2013 and why?
1) RM/USD (Direct Quotation)
The following graph shows the historical trend of ask price for the selected currency pair and time period. Note the ask price is selling price of the bank offered. According to the graph, as we can see there is uncommon behaviour between 1st April to 6th April 2013 where the trends are statics at the beginning and start to decline slowly. That’s mean RM value is appreciates. This is because during this period, USD ISM Prices Paid (MAR) priority is medium or it indicates expansion. ISM Manufacturing assesses the state of US industry by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. So, it represents business sentiment regarding future inflation, where a higher figure indicates stronger expectations of inflation. In addition, there is another one of uncommon behaviour on 4th May to 9th May when the trends is increasing at the beginning but start to fall tremendously until 9th May. It is the lowest ask price for this period which is RM 2.9733 to pay for buying 1 USD. The changes was also affected by the events that happen in Malaysia that moment when we has just finished an election season, so the currency get affected at this time as political exposure when the Consumer Price Index tracks changes about +0.15 % in the cost of living. Where prices are increasing rapidly, authorities raise interest rates to increase the cost of borrowing. This lead to a decline in spending and force retailers to lower prices to entice buyers and an interest
FIN 542
Submitted to:
SIR AHMAD HUSNI
Prepared by:
NURUL AIDA BINTI MD RASHID
BM222 4A
2012824256
Question: Examine data from the website www.oanda.com, USD, pound, and euro for one month of April 2013 until May 20th 2013(obtained from historical exchange rate) and discuss comment the fund for the period. What is your forecast for these currencies for the month of June 2013 and why?
1) RM/USD (Direct Quotation)
The following graph shows the historical trend of ask price for the selected currency pair and time period. Note the ask price is selling price of the bank offered. According to the graph, as we can see there is uncommon behaviour between 1st April to 6th April 2013 where the trends are statics at the beginning and start to decline slowly. That’s mean RM value is appreciates. This is because during this period, USD ISM Prices Paid (MAR) priority is medium or it indicates expansion. ISM Manufacturing assesses the state of US industry by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. So, it represents business sentiment regarding future inflation, where a higher figure indicates stronger expectations of inflation. In addition, there is another one of uncommon behaviour on 4th May to 9th May when the trends is increasing at the beginning but start to fall tremendously until 9th May. It is the lowest ask price for this period which is RM 2.9733 to pay for buying 1 USD. The changes was also affected by the events that happen in Malaysia that moment when we has just finished an election season, so the currency get affected at this time as political exposure when the Consumer Price Index tracks changes about +0.15 % in the cost of living. Where prices are increasing rapidly, authorities raise interest rates to increase the cost of borrowing. This lead to a decline in spending and force retailers to lower prices to entice buyers and an interest