POLYTECHNIC

(COP
GRANCO-COLOMBIAN
UNIVERSITY INSTITUTION FACULTY OF
BUSINESS,
MANAGEMENT AND
SUSTAINABILITY

Theoretical-
Practical Module
Delive
ry
 INSTRUCTIONS FOR
MAKE DELIVERY

Note
Keep in mind that the tutor will tell you what tool you require and what strategy you must
develop to demonstrate your individual participation in collaborative work.

During each of the deliveries proposed in this evaluation activity, specific products must be
delivered in Scenarios 3, 5 and 7, remember that all products must have a cover, also in deliveries
that have to do with a theoretical component ( text), and where analysis is required, it is absolutely
necessary to reference the sources of information on which they are based for their development.

There will be deliveries that have to do with the resolution of workshops or exercises, in which
comprehensive procedures, interpretation and analysis of results are requested.

I recommend that you permanently review the academic calendar so that you send each of the
deliveries within the deadlines established for this purpose, fully complying with them.

P L O IT L É IT C É N C I N C I O CO GR G A R N A C N
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 PRELIMINARY DELIVERY 1
WEEK 3

According to the long-term determinants that impact the formation of exchange rates, such as:

a. National interest rates.

b. International interest rate (USA).

c. Inflation.

d. GDP.

e. International reserves.

Support in depth, with real examples and through a comparative table, how these determinants can
generate changes in the prices of a currency? That is, how do increases or decreases in said
determinants affect the exchange rate?

As a contextualization, below is a model of the requested table with the first mentioned
determinant:

P L O IT L É IT C É N C I N C I O CO GR G A R N A C N
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Economic – financial determinant of the exchange rate

National interest rate

Effects on you exchange rate

If the national i increases If the national i decreases

The exchange rate tends to… The exchange rate tends to…
International interest rate

Effects on exchange rate

If the i in USD increases If the i in USD decreases
Inflation

Effects on you exchange rate

 If inflation increases If inflation decreases
The price of the peso against the dollar and all other currencies The price of the peso strengthens against the dollar and all
weakens as it adjusts to the increase in inflation. other currencies.
 GDP

Effects on you exchange rate

If GDP increases If GDP decreases
The peso price strengthens as a result of the decrease in
The peso price weakens as a result of the increase in inflation.
inflation.

International reserves

Effects on exchange rate

If you increase the RI If the RI decreases
The peso price strengthens as a result of the increase in The exchange rate weakens due to the decrease in monetary
resources. resources.

Proceed in the same way with the other proposed determinants.

PREVIOUS DELIVERY 2
WEEK 5

According to the reading about the description and operation of the currency markets, in this
installment this context will be applied to the Colombian market. Based on this, carry out the
following activities:

1. Investigate the concept of the Electronic Foreign Currency Transaction System (set-FX) and
in this regard, perform an analysis of its applicability in the Colombian foreign exchange
market, emphasizing the advantages and disadvantages that you may perceive of this
system.

2. Investigate and argue about the volume of transactions that Colombia handles in the foreign
exchange market compared to the United States and Europe.

P L O IT L É IT C É N C I N C I O CO GR G A R N A C N
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 FINAL DELIVERY
WEEK 7

Carefully review the conditions and requirements for final delivery:

A Thai importer must pay within 60 days for a letter of credit worth USD 500,000 and wants to cover
the currency risk from August 15 (assumed today).

a. The spot exchange rate on August 15 is USD 1 = THB 30.70, (THB - Thai Baht).

b. The projected exchange rate for 60 days (October 15) is USD 1 = THB 26.65, to which the
importer considers that the possibility of this projection being met is 99%.

c. In the August 15 forward market, 60-day USD (for October 15) is traded for sale with an
exchange rate of USD 1 = THB 28.1.

The importer will consider this forward exchange rate to be too high, but cannot work short against
the currency risk.

Suppose an exchanger offers the Thai importer a call option with a

SP (Striking Price) of USD 1 = THB 27.30 and a call premium of THB 0.20. With this, the importer
will probably consider as a better alternative to secure the exchange rate for the USD with the
purchase of a call option.

In accordance with said statement, the evidence must be developed and delivered:

1. Scenario analysis 1: if the projected exchange rate is met

What recommendation would you give to this importer? To exercise or not to exercise the option?
To support this response, you must disclose the figures (taking into account the premium
payment) with which you justify your decision.

P L O IT L É IT C É N C I N C I O CO GR G A R N A C N
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 2. Scenario 2 analysis: the spot exchange rate after 60 days (October 15) is 28.1THB.

What recommendation would you give to this importer? Exercise or not exercise the option? To
support this response, you must disclose the figures (taking into account the premium payment)
with which you justify your decision.

3. In which scenario does the importer achieve a lower exchange rate compared to the
negotiation rate in the forward market? Justify your answer.

4. If the importer does not exercise the option, how much would the exchanger's profit be?
P L O IT L É IT C É N C I N C I O CO GR G A R N A C
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