UTS International Finance: CNY Currency Trading Analysis Report

This report presents a detailed analysis of a currency trading strategy focused on the Chinese Yuan (CNY). It outlines the conversion of Australian Dollars (AUD) to CNY and the diversification of a simulated currency portfolio. The analysis incorporates various macroeconomic factors such as interest rates, GDP growth, and import/export ratios, which influence exchange rate movements. The report documents trading decisions, including buying CNY by selling AUD, driven by factors like easing trade tensions between the US and China. The trading activities and their motivations are meticulously recorded, including the conversion rates and quantities. The report also reflects on the importance of considering business and macroeconomic factors in exchange rate movements, concluding with the determination of net profit or loss from the trading strategy. References from sources like Pound Sterling Live and FocusEconomics are included to support the analysis. The appendix provides a detailed breakdown of each trading day, including trading times, currency conversions, exchange rates, and trading motivations.

Running head: INTERNATIONAL FINANCE
International Finance
Name of the Student:
Name of the University:
Author’s Note:

1TRADING ANALYSIS
Table of Contents
Trading Analysis..............................................................................................................................2
References........................................................................................................................................3
Appendix..........................................................................................................................................4

2TRADING ANALYSIS
Trading Analysis
The trading analysis for the CNY Currency has been well done with the help of the
various macro-economic factors like the movement of interest rate, GDP growth rate, Import
Export Ratio and the business cycle which primarily affects the exchange rate of an economy. In
the second day of trade we have converted the Australian Dollar investment to Chinese Yuan
Currency that has further helped us in the diversification process to various other currencies. The
total amount of AUD that was converted into CNY currency was around A$500,000 that has left
us with CNY 2,407,330 and the rate that has applied for the purpose of conversion is around
CNY4.8146. In the second day of trading the trading analysis that has been well applied in the
portfolio will be buying of CNY Currency by selling the AUD Currency (England 2019). The
key reason that was stated behind the trade has been primarily due to the easing trade war
between US and China that would be boosting the trade levels as the trade tariffs will be lifted
and would be giving an upward pressure to the CNY Currency. An all total of A$800,000 has
been converted with the help of current exchange rate that is 4.82 thereby getting CNY
3,861,820. The total amount of investment that was done in the CNY Currency was around CNY
6,269,150. On the final day the total of CNY 6,269,150 will be sold at the current prevailing rate
in order to determine the net profit or loss that is associated with the trading strategy and that
would be the actual amount of profit or loss generated from the transactions carried on
(FocusEconomics | Economic Forecasts from the World's Leading Economists. 2019). It was
equally important to note that there were various business factors and macro-economic factors
that plays a huge role in the exchange rate movement and the same should be well taken into
consideration by better market and economic analysis.

3TRADING ANALYSIS

4TRADING ANALYSIS
References
England, U. 2019. [online] Available at: https://www.poundsterlinglive.com/bank-of-england-
spot/historical-spot-exchange-rates/usd/USD-to-CNY-2018 [Accessed 30 Sep. 2019].
FocusEconomics | Economic Forecasts from the World's Leading Economists. 2019. Chinese
Yuan Exchange Rate (USD to CNY) - News & Forecasts. [online] Available at:
https://www.focus-economics.com/country-indicator/china/exchange-rate [Accessed 30 Sep.
2019].

5TRADING ANALYSIS
Appendix
a) Day 2 Trade
Tradi
ng
time
Curre
ncy
Sale
Sale
quanti
ty
Curre
ncy
Purch
ase
Purch
ase
quanti
ty
Excha
nge
rate Trading motivation summary
2:58
pm AUD
1,500,
000 USD
1,015,
800
AUD/
USD
0.677
20
Expected appreciation due to speculation that
people will want to sell their Yuan and invest in
a stronger currency such as the USD.
3:09
pm AUD
500,00
0 CNY
2,407,
330
AUD/
CNY
4.814
66
To diversify portfolio and maximise potential for
profit.
b) Day 3 Trade
Trad
ing
tim
e
Curr
ency
Sale
Sale
quan
tity
Curre
ncy
Purc
hase
Purch
ase
quan
tity
Exch
ange
rate
Trading motivation
summary
14:0
0 AUD
800,
000 CNY
3,861
,820
1
CNY
=
0.207
04
AUD
As per the FXStreet article listed below, the trade
talkings have eased between China and the United
States, and thus the demand for CNY should increase
as Chinese exports would be expected to increase due
to stablity as well as lifted tariffs, and subsequently,
putting upward pressure on it.
C) Day 5 Trade
Trading
time
Currency
Sale
Sale
quantity
Currency
Purchase
Purchase
quantity
Exchange
rate
Trading motivation
summary
CNY
6,629,15
0 AUD 1,378,202 4.81 Closing out position

6TRADING ANALYSIS