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Analysis Of Exchange Rates For 5 Currencies: Usd, Aud,Baht, Ringgit, Euro

2040 words - 9 pages

Q1. Provide and interpret the descriptive statistics(For calculation part for nom appr/depr, please refer to table 1)EUROBased on the calculation of the average exchange rate of Euro against Malaysian Ringgit for the period of 2001-2004 (June) we found it to be 3.8936. As far as max/min analysis are concerned, the max value or the appreciation of Euro with respect to MYR during this period was 4.8851MYR/EURO, whereas the lowest value or depreciation was 3.1781. The average amount of exchange rate data deviated from the mean (3.8936) was 0.4996(S.D). It indicates on the fact that the exchange rate of MYR/EURO has been less volatile over the period of 2001-2004(June).THAI BAHTAccording to our ...view middle of the document...

THAI BATTThe value of Thai batt had been quite volatile throughout the period of 2001-2004. So that during year 2001 with the surge in value in consecutive years. Overall analyses indicate on the fact that Thai baht had been increasing in the value against Malaysia Ringgit throughout the year 2001 till June 2004.AUSTRALIAN DOLLARAustralian dollar was having soaring trend, which is clearly depicted in the graph (fig .1) Overall analysis show that period 2001-2004(June) it has appreciated in nominal terms against Malaysian Ringgit by 23.51% due to drastic appreciation by 33.04% in 2003.US DOLLARBecause of the fact that Malaysia ringgit is pegged to US dollar, the value of dollar with respect to ringgit had been constant throughout the period of 2001-2004.Q 4. What is the % appreciation/ depreciation in real terms?(For calculation part for % appr/depr in real terms, please refer to table 3)EUROIf we want to determine the % appreciation/ depreciation of the currency in real terms, we need to determine its value in real terms by including the factor of inflation. After the computations aimed to find out the real exchange rate of euro against ringgit, we noticed the discrepancy from the nominal exchange rates. The main reason was the inflation factor that we took into consideration while computing the real exchange rate between these currencies. Hence, in 2001, euro depreciated by 0.88% in real terms, whereas in nominal terms the depreciation was 5.69%. In year 2002 and 2003 due to higher relative inflation rates compared to Malaysia euro fell in real terms by 0.2% and 0.59% respectively. The fall in the real terms continued in year 2004, and by June of that year it depreciated by 0.87 %. Generally, throughout the period of 2001-2004(June) euro declined in real terms against ringgit by 1.88%.THAI BAHTThai Baht has slightly depreciated in real terms against Malaysian ringgit. Depreciation was caused due to slightly higher inflation rates compared to Malaysia. If we analyze year by year, we will notice that throughout the period of 2001-2004(June) Baht has slightly depreciated in real terms against Ringgit by 0.43%. So that in year 2001, depreciation was 0.2 %, by appreciation by 1.1% in a consecutive year. In year 2003 and 2004 slightly higher depreciation in real terms of 0.9% and 0.8 % respectively were recorded.AUSTRALIAN DOLLARAustralian dollar depreciated in real terms with respect to Malaysian ringgit throughout the whole period of 2001-2004. The depreciation was due to relatively higher inflation rates in Australia compared to Malaysia during that period. So that overall depreciation in real terms was 1.57%, which is quite significant. If we analyze year by year, then we will notice continuous flow of depreciation of AUD in real terms. Hence, in year 2001 there was the depreciation in real terms of value of Australian dollar against ringgit by 2.87%, with slightly lower plunge in value by 0.97% in 2002. In years 2002 and 2003 it dropped again in...

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