Hannah Yanoski

FIN 344

Exchange Rate Project Part 1

3/4/21
 This analysis covers a fifteen-day trading period from February 8 th to February 26th of the

Dollar per Euro exchange rate and the Yen per Dollar exchange rate. Using Wall Street Journal’s

historical data, I tabled and charted the closing prices of each business day throughout this

period. According to our textbook, the main short-term drivers of exchange rates are the

surprise changes in interest rates, inflation, and overall exchange balance of a nation. These

factors shift a country’s’ demand of currency the most, which will either cause the exchange

rate to appreciate or depreciate, gaining or losing market value compared to another nations

currency. As you can see by the charted movements of these two different FOREX rates,

movements are typically sporadical from day to day, but over time have general increases or

decreases in their overall comparative value.

The first FOREX rate that will be discussed is the Dollar/Euro rate. This rate compares

the shift in value of the dollar in relation to the value of the euro. This rate demonstrates how

many dollars it takes to buy 1 euro. The dollar/euro rate starts off on 2/8 at just under .83

$/euro, and then falls to maintain an approximately .825 rate for the rest of the business week.

It closes on a weekly high of just over .83, and when next Monday comes, the same cycle

continues. The valuation dips lower throughout the week to a two-week low of .821 rate and

rises in time for the week close at a .828 rate. After the two-week evaluation period, the US

dollar depreciated against the Euro a total of .18% which is not a lot in total. Fluctuations of the

rate can be explained by the shifting trust in U.S. based crypto currencies [ CITATION Mic21 \l

1033 ] and the uncertainty such a market presents to United States asset valuations. The

uncertainty of future investments effects the exchange rates because the possibility of

devaluation of US
Investments means potential loss of demand of the dollar, therefore lower FOREX rates.

As China and the United States battle over who can mine the most cryptocurrency, overall value

of the U.S. dollar is still uncertain, but investors aren’t abandoning the US market all together.

The second FOREX rate that will be discussed next is the Yen/Dollar rate. This rate

compares the shift in value of the yen in relation to the dollar, so how many yen would it take

to buy one dollar. The yen/dollar rate starts on 2/8 at .0095 and slowly and consistently loses

value until the last day of the period where it bottoms out at .0093. This slow decrease in

yen/dollar rate shows the yen depreciating by -1.25%. This depreciation is due to the same

reason as the depreciation of the dollar/euro. The uncertainty in the US foreign investment

markets as it buys more heavily into the cryptocurrency world is driving mild day-to-day

fluctuations of the dollar in all foreign markets. With bitcoin value subjective to investors

desires and nations’ responses to its mining, the volatility of it is very high [ CITATION Pau21 \l

1033 ].

Bibliography
Derby, M. (2021, February 25). Retrieved from wsj.com: https://www.wsj.com/articles/derbys-
take-fed-payment-system-crash-puts-spotlight-on-digital-dollar-project-11614249000
Vigna, P. (2021, Feb 2021). Retrieved from wsj.com: https://www.wsj.com/articles/bitcoins-
value-is-all-in-the-eye-of-the-bithodler-11613826002
Date $/Euro
2/8/21 0.82980666
2/9/21 0.82501444
2/10/21 0.82508251
2/11/21 0.82419847
2/12/21 0.82508251
2/15/21 0.82447028
2/16/21 0.82603668
2/17/21 0.83035788
2/18/21 0.82685629
2/19/21 0.82508251
2/22/21 0.82243606
2/23/21 0.82297753
2/24/21 0.82169269
2/25/21 0.82135524
2/26/21 0.82829454
% change -0.18%
the dollar depreciated against the euro by .18
percent

Date  Yen/$
2/8/21 0.00950299
2/9/21 0.00956389
2/10/21 0.00956023
2/11/21 0.00954654
2/12/21 0.00953107
2/15/21 0.00948947
2/16/21 0.00942951
2/17/21 0.00944465
2/18/21 0.00946253
2/19/21 0.00948497
2/22/21 0.00951656
2/23/21 0.00950119
2/24/21 0.00944733
2/25/21 0.00941176
2/26/21 0.00938438
% change -1.25%
the yen depreciated against the dollar by 1.25%
 $/Euro
0.83

0.83

0.83

0.83
Dollar/Euro Rate

0.82 $/Euro

0.82

0.82

0.82

0.82
21 21 21 21 21 21 21 21 21 21 21 21 21 21 21
/ 8/ / 9/ 10/ 11/ 12/ 15/ 16/ 17/ 18/ 19/ 22/ 23/ 24/ 25/ 26/
2 2 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/
Date of Closing Price
  Yen/$
0.01

0.01

0.01

0.01
Yen/Dollar Rate

0.01  Yen/$

0.01

0.01

0.01
21 21 /2
1
/2
1
/2
1
/2
1
/2
1
/2
1
/2
1
/2
1
/2
1
/2
1
/2
1
/2
1
/2
1
8/ 9/ 10 11 12 15 16 17 18 19 22 23 24 25 26
2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/ 2/

Date of Closing Price