Essay on Exchange Rate Analysis

2649 Words 11 Pages
Table of Contents Table of Contents 2 EXECUTIVE SUMMARY 3 1.0 Background Information 4 1.1 Limitations of Analysis 4 2.0 Data analysis 4 2.1 Foreign exchange rate between AUD and USD (AUD/USD) 5 2.2 Foreign exchange rate between RMB and USD (RMB/USD) 7 2.3 Comparison of exchange rates of AUD/USD and RMB/USD 8 3.0 Relationship between AUD/USD and RMB/USD 10 4.0 Hypothesis testing 11 5.0 Factors Analysis 13 5.1 Inflation rate 13 5.2 Interest rate 13 6.0 The effects of exchange rate movements 13 6.1 American dollar depreciation 14 6.2 Australian dollar and Chinese Yuan appreciation 14 7.0 Conclusion 15 Reference 16 Appendix 17

EXECUTIVE SUMMARY

Statistics has proved to be an essential tool towards
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The trend seems set to continue.

(Figure 2: Monthly average exchange rate of AUD/USD 2011)
Figure 2, it is about the monthly average exchange rate between AUD and USD for 2011. It shows at first three months the foreign exchange rate has a smooth change all the exchange rates close to 1. On the 15th of March the exchange rate reached highest point: 1.015920 Australian dollars against 1 American dollar. However after that day, American dollar have a significant decreased. It drops from 1.01592 to 0.96 and at 29th of April the exchange rate reached the lowest point which was 0.912517 Australian dollars against 1 American dollar.

2.2 Foreign exchange rate between RMB and USD (RMB/USD)

(Figure 3: RMB against USD in past 120 days)
As seen in the figure 3, the main direction in the graph shows the exchange rate of the Chinese RMB against USD has been decline over the past 120 days. The slowdowns of the USD make the RMB trend line to be upward. The average of the exchange rate of RMB was 6.55080 against to USD$1. Refer to the appendix of the excel form, we can see the lowest exchange rate of RMB/USD was 6.47431in 6th June 2011, which is declined in the lowest point in the figure3 , and the highest exchange rate of RMB/USD was 6.64306 in 23rd December 2010, which is the highest point reached in the curve. Overall of the curve, the exchange rate of the RMB/USD is in a negative direction, it means the USD

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