logo

Treasury and Risk Management - PDF

   

Added on  2021-06-17

5 Pages1047 Words27 Views
Running head: TREASURY AND RISK MANAGEMENTTreasury and risk managementUniversity NameStudent NameAuthors’ Note

2TREASURY AND RISK MANAGEMENTAnswer to question 3:Introduction:The report is prepared analyze the reasons associated with recent spike in exchangerate of Euro against the US dollar. Discussion incorporates the fundamental impact on themost traded currency pair in the world. This exchange rate witnessed sudden surge duringovernight trading as on 3rd April, 2015. The fall and rise of exchange rate of euro isrepeatedly associated with global risk aversion. Discussion:Reasons impacting the exchange rate of Euro versus US dollar: An insight day was charted and it has shot at higher level overnight. The technicalindicator relative strength index has confirmed the new high of the exchange rate and later ona small pullback was indicated. One of the dominant drivers of exchange rate is the rate ofinterest because they have the capability of influencing speculative flow of money andforeign capital flows. The bottom line for Euro to dollar bulls is due to eventual rise ininterest rate. An economy witness new flows of foreign capital because of rising interest ratesand speculative money flow is attracted due to higher rates being on horizon (Patanè et al.2017). This result in upward movement of the exchange rate as such flow of money attemptto get ahead of the appreciation of company. From the analysis of the reason being the spikein the exchange rate, it is ascertained that there are three factors that make the exchange rateof EURO and US dollar sensitive such as adverse political development, readings on inflationand policy noise of European central bank ahead of the meeting during that time (Manahov etal. 2014).

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Treasury and Risk Management Assignment
|9
|1788
|60

FOREX Analysis (Stage 1 - individual part) - EUR/USD
|5
|780
|277

Treasury & Risk Management Assignment
|8
|2010
|27

Pound US dollar exchange rate: GBP drops as UK inflation falls below forecasts
|3
|602
|89

Macroeconomics Assignment | Answers to Questions
|6
|1142
|21

Assignment On Eurocurrency | Money Market
|15
|5514
|167