FIN 825 - AE – International Finance

EXCHANGE RATE AND CURRENCY EXPOSURE PROJECT

The objective of the project is to use concepts learned in class to assess 1) country risk and 2)
retrospectively monitor spot foreign exchange rates over a continuous period of time, 3) review the
currency exposure of that country’s firm or MNC, 4) present the information to the reader in a concise and
clear manner, and 5) practice public speaking skills through the presentation of your country/firm and
currency analysis in class. The project will focus on a macro-assessment of a country risk with
consideration to a specific business or MNC.

Please note that you must choose both a country and an MNC. It is required that an MNC you choose to
present is of the country of your choice; that is, it may not be domiciled in a different country. Please do
not choose the U.S. as the objective of the course is to focus on foreign countries and firms.

In the body of the report the students will include:

1) Political risk analysis
2) Financial risk analysis
3) Visual presentation of the movements of exchange rate and the identification and discussion of important
events and trends that have impacted the movements. At least five events have to be discussed.
▪ You are required to analyze at least 5 years of exchange rate movements relative to the US
Dollar.’
4) Overview of a chosen firm’s (or MNC’s) currency exposure and how changes in the exchange rates
affected the company’s currency exposure for that period.

You will produce 10–12-page double-spaced typewritten team report proofread for spelling and
grammatical errors. The oral presentation is limited to 15 minutes and needs to be accompanied by
PowerPoint slides. Articles referred to in support of the analysis should be cited at the end of your written
report, using the APA standard.

Country Choice:
You are free to choose any country except the U.S. as the objective of the project is to focus on foreign
countries and firms.

Teams:
You will work on this project in teams of about 4 students, depending on the class size. It is the team’s
responsibility to monitor that all members contribute equally to both the written report and oral presentation
of the project.

Due Dates:
Project progress report is due on March 30. Your final written report as well as the PPT slides /files of your
presentation in both are due on April13 prior to the class. Presentations will take place on April 13.
 PROJECT GRADING CRITERIA
PRESENTATION – out of 50 points:

- High standard of professional communication during presentation /10

- Professional quality of Power Point slides /10

- All project areas well described, presented, and supported /30 o Political risk analysis /8 o Financial
risk analysis /8
o Visual presentation of exchange rates and identification of important events that have
impacted the movements (at least 5 events; 5 years of RFX movements against U.S.$) /7
o MNC and its currency exposure /7

TOTAL: /50

WRITTEN REPORT – out of 100 points:

Project structure:

1) Political risk analysis /25

2) Financial risk analysis /25
3) Visual presentation of the movements of exchange rate and the identification and discussion of important
events and trends that have impacted the movements. At least five events have to be discussed.
▪ You are required to analyze at least 5 years of exchange rate movements relative to the US Dollar.
/20
4) Overview of a chosen firm’s (or MNC’s) currency exposure and how changes in the exchange rates
affected the company’s currency exposure for that period. /20

Other:
- Report well written, with clear structure, proofread, edited, and serves as a representative sample of
professional writing /10

TOTAL: /100

GRAND TOTAL: /150

Project Resources
Exchange rates
http://www.ny.frb.org/markets/foreignex.html - historical exchange rate data that may be used to create technical
charts of exchange rates.
http://www.bmonesbittburns.com/economics/fxrates - forward rates for the euro, British pound, Canadian dollar, and
Japanese yen for 1-month, 3-month, 6-momth and 12-month maturities. These forward rates may serve as forecasts
of future spot rates.

http://www.oanda.com - historical exchange rate movements. Data are available on a daily basis for most currencies.

http://www.sonnetfinancial.com/rates/full.asp - bid and ask quotations for all major currencies. This website provides
exchange rates for many currencies. The table can be customized to focus on the currencies of interest to you.

http://www.bloomberg.com - cross exchange rates for several currencies only.

http://www.xe.com/ict/ - real-time exchange rate quotations.

http://www.federalreserve.gov/releases - current and historic exchange rates.

http://www.bis.org.statistics/eer/index.htm – information on how each currency’s value has changed against a broad
index of currencies.

http://www.bis.org/cbanks.htm - links to websites of central banks around the world; some of the websites are in
English.

http://www.ny.frb.org/markets/foreignex.html - information on the recent direct intervention in the foreign exchange

market by the Federal Reserve Bank of New York.

http://www.ny.frb.org/research/global_economy/undex.html - exchange rate and interest rate data for various

countries.

Effects on exchange rates

http://www.ny.frb.org - links to information on economic conditions that affect foreign exchange rates and potential
speculation in the foreign exchange market.

Country risks
http://www.cia.gov - valuable information about political risk that should be considered by MNCs that engage in
direct foreign investment.

http://www.heritage.org - interesting insight into international political risk issues that should be considered by
MNCs conducting international business.

http://lcweb2.loc.gov/frd/cs/cshome.html - detailed studies of 85 countries provided by the Library of Congress

http://www.stat-usa.gov - access to a variety of microeconomic and macroeconomic data on emerging markets.

http://www.duke.edu/~charvey/Country_risk/couindex.htm - results of Campbell R. Harvey’s political, economic,

and financial country risk analysis.