Foreign Exchange Risk & Strategies PDF

RUNNING HEAD: Financial analysis and currency pair
1
Name of the student
Topic- Financial analysis and currency pair
University name-

Financial analysis and currency pair 2
Executive summary
This report has reflected the key understanding on the currency pair and associate foreign
exchange risk and strategies which could be undertaken by the banks and investors on
international level. This report is accompanied with the structure of currency pair AUD and USD
and another one is related to USD and EURO. However, proper level of risk and obstacles
related with the foreign exchange and what kind of strategies and shield could be used to
mitigate these issues has been taken into consideration.

Financial analysis and currency pair 3
Contents
Executive summary................................................................................2
Introduction............................................................................................4
Objective of the report...........................................................................4
Currency pair..........................................................................................4
Outline and explanation of market view and currency pair of AUD and
USD..................................................................................................................5
Foreign exchange trading strategies......................................................7
Risk and obstacles in Foreign exchange trading....................................9
Conclusion............................................................................................12
References...........................................................................................13
Appendix..............................................................................................15

Financial analysis and currency pair 4
Introduction
With the ramified economic changes and complex set of business functioning, each and
every organization is affecting its business structure and financial performance through foreign
exchange rate. In this report, Westpac bank has been taken as organization. In this bank I being a
part of the foreign exchange dealing team working for the bank will evaluate the currency pair at
international level.
Objective of the report
In this report, study has been prepared to evaluate marketing view concerning the
behavior at least two currency pairs over the next three to six months. After that foreign
exchange trading strategies and other methods have been taken into consideration. There are
several risk and obstacles which may be faced by investors while investing their money on
international level.
Currency pair
There are two currency pair have been designed with a view to analysis and evaluate the
market fluctuation throughout the time (Dervis, De Melo, and Robinson, 2015).
 Australian dollar and USD dollar
 USD dollar and EURO

Financial analysis and currency pair 5
Outline and explanation of market view and currency
pair of AUD and USD
After evaluating all the details and market perception of the currency rate of Australia
and America. It is evaluated that since last three months the currency value of Australian dollar
has gone up by 20%. In addition to this, US dollar rate has also increased by 22% since last three
month. There are two currency pair have been designed with a view to analysis and evaluate the
market fluctuation throughout the time (Dervis, De Melo, and Robinson, 2015).
After evaluating the data and details of the currency pair of AUD and US, it is considered
that the base rate is AUD which is compared with the US dollar currency. This currency pair is
the quotation of the relative value of currency units against the unit of another currency which is
determined foreign currency market exchange rate. It has shown that company since 15th august,
2017 AUD dollar rate was affecting by the 1 % if the US dollar rate change by .78%. This has

Financial analysis and currency pair 6
shown that AUD dollar rate has low currency value as compared to US dollar. The main reason
of this level of changes in the currency value of these two countries is based on the balance of
trade, gross domestic product rate and changes in national income. It is evaluated that US dollar
GDP rate is has increased by 5% since last three months. On the other hand, Australian economy
has changed by 2% since last three years. This level of changes has shown that Australian
currency value will go down. In addition to this, in September, US has faced drastic downfall in
its stock market which has resulted to AUD dollar rate to .80 as compared to US dollar rate.
After that, due to the increased national income and GDP rate of USA, currency swap rate or
USA and AUD was 1:.77 (Dervis, De Melo, and Robinson, 2015).
These levels of changes in value of currency of these countries have shown the positive
market growth and effective growth of these countries. The market behavior and forecasted data
of the Australian and US has shown positive inclination however, value of these currency have
increased due to the positive balance of trade and increased purchasing power of parity.
The relation between USD and EUR euro is reflects the key relation between how these
both currencies get fluctuated due to the changes in the global economic rate, gross domestic
product rate and euro money changes. After extracting information form the online sources, it is
observed that average rate of USD dollar value is .84 as compared to 1 Euro. It has been