SMU MF0015

#1 December 31st, 2016, 06:33 PM

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shabnams · #2 January 2nd, 2017, 11:04 AM

As you are looking for Sikkim Manipal University (SMU) MBA 4th sem MF0015 paper solved assignment, so on your demand I am providing same :

Q1 Write short notes on:
a) Measuring exchange rate movements
b) Factors that influence exchange rates
(Measuring exchange rate movements, Factors that influence exchange rates)5,5
Answer.
a) Measuring exchange rate movements
The movement of exchange rates is the result of the combined effect of a number of factors that are constantly at play. Economic factors, also called fundamentals, are better guides as to how a currency moves in the long run. Short-term changes are affected by a multitude of factors which may also have to be examined carefully. Changes in one nation's economy are rapidly transmitted to that nation's trading partners. These fluctuations in economic activity are reflected almost immediately in fluctuations of currency values. These changes in exchange rates expose all those firms having export import operations as also multinationals with integrated cross border production and marketing operations. It is useful to be aware of the various factors that influence exchanges rates. By a study of these factors and the trend of movements in the value of particular currency, an experienced businessman may be able to forecast the possible future movement of that currency. This will enable him to:
(i) Estimate his risk and
(ii) Make an informed, prudent decision as to whether it would be worthwhile for him to carry the risk or to take some appropriate steps to reduce that risk.

b) Factors that influence exchange rates
The demand factor
At the most primary level, a change in the price of a currency will occur because of more or less demand for it. High demand signifies a higher price experience of the currency pair. Less demand signifies fall in the price of the currency pair. An increased demand for a currency suggests a strong economy, while a

The supply side factor
A basic economic principle of supply says that a currency's value will change with the rise and fall of the levels of supply. The value and price of a currency will diminish if there is a higher supply of a currency.

Long term vs. short term
A time period of a year or more signifies a long-term supply and demand. Short term is generally thirty days or less than that. The currency prices in both the time periods can be affected by the same factors. A trader should be conscious of the time factor in which a trade is placed.

Factors affecting Currency Trading
A number of factors affect the rates of exchange. At the end, costs of currency result from the supply of currency. The currency markets all over the world can be considered a huge melting pot.

Economic factors
These include the economic policy of the government which is made known through various government agencies and the central bank of the country, and economic conditions, generally revealed through economic reports.

Sikkim Manipal University (SMU) MBA 4th sem MF0015 paper solved assignment,