A roadmap for writing a currency report
International Finance
The aim of the currency report is to analyze and forecast the exchange rate for the chosen
currency. For the report's purposes, consider the selected currency's exchange rate against
the US dollar. The following guidelines provide general ideas and suggestions for the analysis
and forecast with references to specific Thomson Reuters Refinitiv functions, which are useful
for report writing. This guideline provides some ideas on approaching the analysis and
forecasting. It is strongly recommended to use Refinitiv as the source of data, charts, news,
and other relevant information for the analysis. To state the Refintiv source of your analysis,
please make print screens of Refinitiv and state the date.
State the date of your analysis, your name, and UČO. The report will consist of 2 parts. In the
first part, describe and explain what affected the examined exchange rate during the year
2023. In the second part, perform the FX forecast for the following six months (January-June
2024). The recommended length of each part is 3-4 pages. The minimum number of words
for the whole currency report is 2500.
The report should tell a story on what economic and political factors moved the exchange rate
in 2023 and what factors will be the best key determinants of price movement in 2024.
Conclude with specific predictions and recommendations for investors on how to manage the
exchange rate risk. State all the sources and hand out the report in MS Word. Upload the
currency report to IS by 15th December 2023. Please support all your statements with relevant
arguments.
The main information on the studied currency might be discovered through the FX SPOT RATE
Function, which is “currency abbreviation” plus “=” e.g., “EUR=”, “GBP=”, “JPY=” etc. On this
page, you find three useful sections: (i) overview, (ii) chart, (iii) FX Polls. You can also use the
Country menu. Having this, just write the name of the country to the search window, e.g.,
“Eurozone” and click on the country overview app. On this page, you will find central bank
information and macroeconomic indicators. Another option is the FXG function, where you
select the examined currency in the upper left corner. Try to determine which events and
processes have influenced the most significant changes in the exchange rate (macroeconomic
news (variables), central banks' decisions, political events).
Describe the exchange rate system for the studied currency. Identify the role of the central
bank in the price changes of the studied exchange rate. Analyze how the monetary policy
influenced the FX rate in 2023 and what is expected for 2024. For macroeconomic variables,
use the Macro Vitals app (MACROVIT). For the central bank information, just write the name
of the central bank, e.g., “ECB” in the search window and click on the central bank app. You
can also use the FX POLL function for the foreign exchange rate forecast model. This function
summarizes a collection of forecasts from individual analysts/forecast providers (consider the
full texts of available forecasts as examples). Additional information can be found via the
NEWS function.
Provide the exchange rate forecast based on parity conditions. Evaluate how the changes in
interest rates (UIRP) and inflation (PPP) influence the studied exchange rate (you can
demonstrate the relationships between fundamental variables and exchange rates on the
chart). You can also add a forward rate to your analysis. The chart with forward rates is
available in the FX POLL function. Forward rates can be discovered via the FX FORWARD
CALCULATOR APP. The other information about interest rates can be found in the app of the
central bank (please read the paragraphs above).
The chosen currency might be examined through the price chart (CHT function). Consider
technical analysis tools to forecast the studied exchange rate. Use any tools based on your
personal preference and knowledge. Consider analyzing trends, support, and resistance levels,
head-and-shoulders patterns, and double-bottom or double-top patterns. Short-term
technical analysis can be found via the FXBUZZ function. Compare your forecasted exchange
rates with the market-based forecast forward prices and predictions of professional analysts
(FX POLL function). Forward prices and charts can also be found via the FXG function (select
the analyzed currency in the top left corner) or write, e.g., “EUR forward” in the search
window. Provide specific recommendations on the transaction exchange risk management
opportunities, including hedging (and specific instruments, if necessary).