International Trade & Investment, Spring 2017

Foreign Exchange Exercise

(http://fx.sauder.ubc.ca/data.html)

EXHIBIT 1: Country Groups for Foreign Exchange Exercise

U.S Neighbors & Africa Caribbean Middle East & Asia Oceania South America
Group Group Group Group Group
Major Trading
Partners Group
(Group 1) (Group 2) (Group 3) (Group 4) (Group 5) (Group 6)

Algeria Barbados Israel Australia Argentina

Canada

Egypt Jamaica Indonesia Fiji Brazil

China
European Union
(Single Currency Ghana Trinidad and Tobago Jordan New Zealand Chile
Zone)

Nigeria Kazakhstan Colombia

India

South Africa Malaysia Costa Rica

Japan

Philippines Peru
Mexico

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 United Arab Emirates Venezuela
Russia (UAE)

fx.sauder.ubc.ca/

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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, our Lesson overview, text and PowerPoint presentation on exchange rates and exchange
rate system.

(http://fx.sauder.ubc.ca/data.html)

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)
on the following two dates:

i) April 7, 2016 and April 7, 2017 (Express in Direct Quote, as defined above)
ii) April 7, 2016and April 7, 2016 (Express in Indirect Quote, as defined above)

Q2. For the two countries selected above, how much has each currency appreciated or depreciated (in percentages) between April 7,
2016 and April 7, 2017?
To find out, use the following formula to calculate the currency appreciation or depreciation.

(Et E0)/E0 * 100 = % ER, where:

E0 = Exchange rate at the beginning of the period (US dollar per X currency)
Et = Exchange rate at the end of the period (US dollar per X currency)

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% ER = change in exchange rate = the amount of appreciation or depreciation (in percentages)

Q3. a) From the above website, use the Plot Interface function to create a chart for each of the two currencies between the exact
time period of April 7, 2016 and April 7, 2017, using exchange rates expressed as US dollar per X foreign currency units, the direct
quote (see Q2 above). Attach the charts to your paper.

b) From the charts, describe the movements or trends of the exchange rates during the period.

a) Make a general statement comparing the two currencies, in terms of their strengths or weaknesses against the dollar during the
period.

b) What impact, all things being equal, would each currency have had on trade (exports and imports) between the U.S and the
trading country/countries between April 2016 and April 2017? Explain in a paragraph, with at least two examples, one on
exports and the other on imports, from the perspective of either country engaged in trade with the other.

Q4. a) From your charts or based on a quick search, what type of exchange rate system are the two currencies on? Explain.

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 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.

Submission Requirements:

This assignment must be typed, 1.5 spacing, 12-font size.

Each of the questions above must be answered separately.
Attach charts where appropriate.
Excluding the charts and references, the text should not exceed three (3) pages.
Due Date: April 20, 2017.