Impact of Interest Rate on Exchange Rates and Macroeconomic Indicators
Added on 2019-10-31
11 Pages1489 Words296 Views
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Running head: EXCHANGE RATEEXCHANGE RATEName of studentName of UniversityAuthor note
1EXCHANGE RATETable of ContentsPart 1................................................................................................................................................2Part 2................................................................................................................................................4Part 3................................................................................................................................................6References......................................................................................................................................10
2EXCHANGE RATEPart 1Exchange rates mainly show the amount by which one currency can be purchased foranother currency. This section of the study mainly aims to explore the behavior of exchangerates in coming months . For showing the behavior of exchange rates study included pair wiseexchange rate of Australia and European Union. This study included this pair since they arerenowned exchange rates in all over the world. Australian dollar is the currency of Australia. In2016 Australian foreign exchange market stood at the eight positions in the world. It also has oneof the highest turnovers in global markets. Now EURO shows the currency of Eurozone. It is thesecond largest reserve currency.Currency pair shows the quotation of relative value of a currency against the currency ofanother currency. Currency pair AUD/EURO is the most traded pair of currencies. Pair does notinclude USD . The currency pair performance of AUD/EURO in the next three months is :MonthOpenLow-HighCloseOct0.6810.677-0.6970.687Nov0.6870.668-0.6880.678Dec0.6780.671-0.6910.681Table 1: AUD/EUROSource: (Longforecast.com, 2017)The above table shows that AUD to EURO forecast for October 2017 shows that exchange rate bided at 0.697 and the average reached for this month is 0.686. Now for the month
3EXCHANGE RATEof November exchange rate bided at 0.688 but finally it is settled at 0.680, lastly the month of December shows that bided exchange rate is 0.691 while it averaged at 0.68.OctNovDec0.670.670.680.680.680.680.680.690.69AUD/EURAUD/EURGraph 1: AUD/EUROSource: (Longforecast.com, 2017)The above graph shows the furcated value of exchange rate for the period of three months. It can seen from the graph that in October the exchange rate is higher but in the month of November it is expected to be lower again in the month of December it is expected to reach high. Thus in the month of November exchange rate is expected to depreciate and this may lead to less worth of Australian dollars , also Australia exports will become cheaper and imports will be expensive. Thus Australia will become competitive in November. However, the month of December shows appreciation in exchange rate.
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