Currency Exercise- describing what causes exchange rates to move

Currency Exercise


This exercise is a short write-up describing what causes exchange rates to move, which begins on 3/12 (See Wednesday’s 3/13 paper/on-line for Tuesday’s closing prices) and ends on 3/20 (Tuesday’s closing price in Wednesday paper) – explaining the change in currencies over 5 periods, e.g., Tues. to Wed., (1 period).  Turn in the write-up on March 26st.  Graph the indirect exchange rates (foreign currency per U.S. dollar) for the Yen, Pound and Euro. Give an explanation of why each currency moved in the direction it did for the particular period, e.g., the pound appreciated (increased in value – less of the foreign currency to buy one dollar) relative to the dollar between March 18 and March 19 because the Federal Reserve Chairman lowered U.S. interest rates one-quarter of one percent, thereby reducing the attractiveness of U.S. bonds to foreigners.  You will be given the opportunity to resubmit if you do not grasp the concept, i.e., getting a 3.5 or below.  Wall Street Journal and are good sources.


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