Part 1
International Finance assignment country assigned is Brazil
You will be responsible to track a particular country and its currency. Whatever happens economically in a country ultimately will affect the currency. As a result, you will become familiar with your assigned country (currency). You should be able, not only to tell us about the history of the country, however, what current economic events that are occurring and how it is affecting their currency. You will give both direct and indirect quotes. You must also state the date of the quote. Some facts you should be familiar with are your country's GDP, exports, labor force, per capita income, etc. All this information is available via the internet.The introduction to your countries must be in your own words and not a link from the Internet. Note that this must be economic information. I do not wish to know where the country is located or what language they speak. I want economic information (the value of the currency at a specific date; GDP, Unemployment, Inflation, Interest rates, trading partners, per capita income; etc). 1 full page
Part 2
1
Salem Five Banksbid price for Canadian dollars is $.7938 and its ask price is $.81.What is the bid/ask percentage spread?
2) Compute the bid/ask percentage spread forMexican peso retail transactions in which the ask
rate is $.11 and the bid rate is $.10.
3) The KholCorporation is a U.S. exporter that invoices its exports to the United Kingdom in British pounds.If it expects that the pound will appreciate against the dollar in the future,
should it hedge its exports with a forward contract?Explain.
4) If the direct exchange rate of the euro is worth $1.25, what is the indirect rate of the euro?
That is, what is the value of a dollar in euros?
5) Assume Poland's currency (the zloty) is worth $.17 and the Japanese yen is worth $.008.
What is the cross rate of the zloty with respect to yen?That is, how many yen equal a zloty?
6) Bank of Americaexpects that the Mexican peso will depreciate against the dollar from its spot
rate of $.15 to $.14 in 10 days.The following interbank lending and borrowing rates exist:
LendingRateBorrowingRate
U.S. dollar
8.0%8.3%
Mexican peso
8.5%8.7%
Assume that Bankof Americahas a borrowing capacityof either $10 million or 70 million peos in the interbank market, depending on which currency it wants to borrow.
a. How could Bankof Americaattempt to capitalize on its expectations without using deposited funds? Estimate the profits that could be generated from this strategy.
b. Assume all the preceding information with this exception: Bankof Americaexpects the peso to appreciate from its present spot rate of $.15 to $.17 in 30 days. How could it attempt to capitalize on its expectations without using deposited funds?
Estimate the profits that could be generated from this strategy.
7) Citizens Bank expects that the Singapore dollar will depreciate against the dollar from its spot
rate of $.43 to $.42 in 60 days. The following interbank lending and borrowing rates exist:
Lending RateBorrowing Rate
U.S. dollar
7.0%7.2%
Singapore dollar
22.0%24.0%
CitizensBank considers borrowing 10 million Singapore dollars in the interbank market and investing the funds in dollars for 60 days. Estimate the profits (or losses) that could be earned from this strategy.Should Citizens Bank pursue this strategy?