FIN5IFM - Exchange Rate Behavior - Accounting & Finance Assignment Help

Assignment Task

1. TASK OVERVIEW
Lecture week 3 introduces the concept of arbitrage and parity theories – interest rate parity (IRP), purchasing power parity (PPP), and international Fisher effect (IFE).
Lecture 2 introduces the foreign currency market, its equilibrium condition, factors affecting the exchange rate, why the government controls the exchange rate, and the
way government interferes in the foreign exchange market. Building on the concepts primarily related to Week 2 and 3, this Exchange Rate Report aims to test and expand your understanding to assess whether IRP, PPP, and IFE hold in the forex market with regards to AUD/USD pair over the past 5 years.

2. MAJOR TASK DETAILS
Background Work - Data Collection
The task requires you to collect the following data from various open sources.
• Collect monthly spot exchange rate between AUD/USD pair over last five years (60 data points)
• Collect quarterly future exchange rate1 between AUD/USD pair over last five years over las five years (20 data points). Convert quarterly data points into monthly data (60 data points) using the interpolation method.
• Collect the monthly interest rate and inflation rate for both the USA and Australia. 

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