Special Topics in Economics Econ. 491 Chapter 6: Currency Development Report

I. Exchange Rates Developments Report  The report analyzes the performance of the exchange rates for main currencies during a particular period of time ( week, month, quarter, year).  The report consists of four sections; Exchange rates performance, interest rates performance, exchange rates expectations, and interest rates expectations.

II. Exchange Rates Performances  In this section, the changes in the exchange rates are described based on numerical data.  A numerical table is used in this section to show the changes in the rates.  Sources of the exchange rates figures can be obtained from different places but mainly from Reuters.

 According to this table; Source: Reuters What is happening to the US dollar v.s main currencies? “The exchange rate of the US dollar …….(increases / decreases) against the main currencies at the end of month X. Particularly, the US dollar closed at ……(higher / lower) rate by ….% against …… in month X compared to the month Y closing rate” “The exchange rate of the US dollar …….(increases / decreases) against the main currencies at the end of month X. Particularly, the US dollar closed at ……(higher / lower) rate by ….% against …… in month X compared to the month Y closing rate” StatementClosing rate in the last month (Y) Closing rate in the current month (X) Change rate (%) Highest levelLowest level Yen per US dollar % Euro per US dollar %

Why the US dollar v.s main currencies is increasing/ decreasing? “The exchange rate of the US dollar …….(increases / decreases) against the main currencies at the end of month X for several reasons.……mention them …..etc” “The exchange rate of the US dollar …….(increases / decreases) against the main currencies at the end of month X for several reasons.……mention them …..etc” Now; let’s look at the other currencies’ performances? - In order to check on the other currencies, we have to plot its trend with the US dollar. - In order to check on the other currencies, we have to plot its trend with the US dollar. - According to the graph, we can tell of the currency is increasing or decreasing then repeat same procedures that done with the dollar. - According to the graph, we can tell of the currency is increasing or decreasing then repeat same procedures that done with the dollar.

 According to the graph, What’s happening to the Euro v.s US Dollar? Dollar for each Euro Euro Exchange Rate against Dollar

Why the Euro v.s US dollar is increasing/ decreasing? “The exchange rate of the Euro …….(increases / decreases) against the US dollar at the end of month X for several reasons.……mention them …..etc”

III. Interest Rates Developments  In this section, the developments in the interest rates for main economies are described.  A numerical table is used in this section to help showing the changes in the policy.  Sources of the interest rates figures can be mainly obtained from national central banks.  Each month, central banks announce their decisions with regard to interest rates whether increasing the rates; decreasing; or keeping rates unchanged.

 According to the graph, What’s happening to interest rates? Source: National Central Banks Source: National Central Banks Statement Last Month (X) Current Month (Y) Base Change in Points USA: - Federal Fund Rate - Discount Rate % 0.75% % 0.75% ---- Euro Area: -Main Refinancing Operations0.75%0.50%25 UK: -Official Bank Rate Paid on Commercial Bank Reserves 0.50% - Japan: - Overnight Call Rate % - Canada: - Overnight Rate1 %1 %1 %1 %- Australia: - Overnight Cash Rate3 %3 %2.75 %25

IV. Exchange Rates Expectations  In this section, the expectations about the exchange rate performance will be described.  Sources of the exchange rates expectations can be mainly obtained from different reports: - Scotia bank; Global EconomicsGlobal Economics Institute of International Finance; Global Economic Monitor - Institute of International Finance; Global Economic MonitorGlobal Economic MonitorGlobal Economic Monitor - J.P. Morgan’ Reports Hargreaves Lansdown ; - Hargreaves Lansdown ; Currency Research CentreCurrency Research Centre - IMF Reports  It will be so helpful if reports mention the expected rates, as figures, for the future.

 The following table is helpful; Source: ………… StatementNext Month (Z)Next three Months Yen per US dollar Euro per US dollar

V. Interest Rates Expectations  In this section, the expectations about the interest rates will be described.  Sources of the interest rates expectations can be mainly obtained from different reports: Institute of International Finance; Global Economic Monitor - Institute of International Finance; Global Economic MonitorGlobal Economic MonitorGlobal Economic Monitor Hargreaves Lansdown ; - Hargreaves Lansdown ; Currency Research CentreCurrency Research Centre - J.P. Morgan’ Reports - IMF Reports  It will be so helpful if reports mention the expected rates, as figures, for the future.

 According to the graph, What’s happening to interest rates? Source: National Central Banks Source: National Central Banks StatementNext Month (Z)Next three Months USA: - Federal Fund Rate - Discount Rate % 0.75% % 0.75% Euro Area: -Main Refinancing Operations0.75%0.50% UK: -Official Bank Rate Paid on Commercial Bank Reserves 0.50% Japan: - Overnight Call Rate % Canada: - Overnight Rate1 %1 %1 %1 % Australia: - Overnight Cash Rate2.75 %2.50 %