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MBA723 Currency and Country Risk Analysis

Assignment Worksheet

1. For your chosen country identify its currency’s name and trading symbol below:

Country	Currency	Trading Symbol*
Example: United States	Example: U.S. dollar	Example: USD

* Three letter trading symbols can be found at http://www.oanda.com/convert/classic.

Research the exchange rate over the past 12 months between the U.S. dollar and the currency you have chosen above and complete the tables below.[footnoteRef:1] [1: Links to sites that may assist you in completing the tables include: Historical Exchange Rates @ http://www.oanda.com/currency/converter/ http://www.federalreserve.gov/releases/h10/hist/ http://fxtop.com/en/historical-exchange-rates.php http://www.bankofcanada.ca/rates/exchange/10-year-converter/ (Please advise your instructor if you locate other helpful sites or find any of the above links broken.) ]

Currency	Today’s Date	Today’s Spot Exchange Rate in American terms, i.e., USD per one unit of foreign currency[footnoteRef:2] [2: The exchange rate for the euro in American terms is expressed as the number of U.S. dollars it takes to buy one euro. It is the inverse of the exchange rate expressed in European terms. The exchange rate for the euro in European terms is expressed as the number of euros it takes to buy one U.S. dollar. It is the inverse of the exchange rate expressed in American terms.]	Today’s Spot Exchange Rate in European terms, i.e., one unit of foreign currency per USD

In completing the table below express your answers in EITHER American or European terms:

Today’s Exchange Rate
Exchange Rate One Year Ago
Percentage Change over Past Year
52-Week High in Past Year
52-Week Low in Past Year

2. For your selected country provide the following data:

	2012	2013	2014	2015
Balance of Trade
Current account balances
Portfolio investments
Foreign direct investment
Official monetary reserves

Be sure to identify the units of currency in which the data is expressed and whether ‘000 or more digits are omitted.

3. Identify the currency’s classification according to the IMF’s table of Exchange Rate Arrangements at

http://www.imf.org/external/pubs/nft/2014/areaers/ar2014.pdf

At this site in Table 2 on pages 5-7 find the exchange rate arrangement on the left (1 of the 10 listed, ranging from “No Separate Legal Tender” for 13 countries to “Free Floating” for 29 countries) associated with the country whose currency you’ve chosen.

Currency Chosen	Exchange Rate Arrangement

4. Consider the data above and your prior analyses on your chosen country and answer the following questions:

i. How would you assess the economy’s performance in the recent past?

ii. What are the likely effects on the currency short-term (over the next year) of the trends in the macroeconomic data?

iii. Would you invest in the economy in the short-term (over the next year) and/or medium term (over the next three years)? Explain.

Name: ___________________________________________________________ Date: ______________