FOREX Project

Currency Selection
If you are going on an OMBA trip, select a currency of any of the countries included on these trips. Exceptions – you can’t select UAE, Panama or Singapore (because they have a fixed currency / pegged to another currency). You can select the currency of the same country that you use for your Country Report, or the currency of a second country included on your trip. If you are not going on a trip you can select any foreign currency of interest to you as long as it traded and is not on a fixed regime.

Currency prediction – due by 11:59 EST 04/22
Submit these 3 sentences via BB Tab:
I’m selecting this country ___ for my FOREX report. I’m selecting this currency ___ . I predict it will … appreciate (go up) OR depreciate (go down) relative to the US dollar. (Suggestion: Start following your currency as soon as you read this assignment. Then you will have a feel for its direction before you have to submit your prediction.)

Project Background

Complete Module 2 before working on this project. Imagine you are a currency speculator starting out with the sum of $1,000,000. Here is your step-by-step plan – using the currency you selected.

1. Use standard end of the trading day market quotes for exchange rates, such as those listed in the Wall Street Journal. Do not use ask-bid type of quotes.
2. Based on your preliminary analysis, decide whether this currency is going to appreciate (go up) or depreciate (go down) against the dollar in the time period of the project; April 22 to May 6 (approximately two weeks).
3. If you think your target currency will appreciate, you must take a long position. Use your $1,000,000 to buy this currency in order to sell it at the end of the holding period and make a profit.
4. If you think it will depreciate, you must take a short position. Borrow the foreign currency today against your $1,000,000 collateral; sell it immediately for dollars; hope to repay the loan at the end of the period by buying this borrowed foreign currency with dollars at a cheaper rate.
5. Do NOT account for currency exchange fees, interest that would be due on the borrowed foreign currency, or any other transaction costs.
6. Do not worry if you “lose money.” That will not affect your grade in any way. What is important is your understanding of currency trading, your grasp of relevant data, your reasoning, and a meaningful commentary.

Project Instructions

Part One
1. Follow the fluctuations of your currency exchange rate against the dollar using The Wall Street Journal, or any other official source.
a. Use this data to create a statistical table AND to draw a graph. (In Module 2 we will discuss directions to automatically create a graph.)
b. The Table shows daily currency exchange rate against the dollar for the time period.
c. The Graph shows daily currency exchange rate against the dollar for the time period. The graph should match the Table.

2. At the end of the period – Use AI (e.g., ChatGPT) to generate the following
a. Calculate how much you have lost or gained. Show this result in both USD and in percentage terms.
b. Annualize the returns.
c. Notes:
1) You’ve heard of LIFO & FIFO. Don’t forget GIGO (Garbage In; Garbage Out). In order to use AI for this project, you will need to understand the concepts. You will need to THINK before just dumping the info into AI.
2) For example, you will need to provide AI with the CORRECT exchange rates on the relevant dates. Use caution when reading the rates (e.g., is it number of GBP per USD or vice versa?).
3) Review the answers that AI generated. Don’t assume they’re automatically correct. If the answers don’t look right, re-write your instructions more clearly and submit to AI again. When using AI, you need to ask good questions in order to get good answers. Review everything that AI provides you. (Don’t just cut and paste the AI answer.) You will need to tweak your questions and re-submit until you receive good output. You may also need to add a few comments/corrections of your own.

Part Two (Do NOT use AI) –
• Do NOT use any form AI (e.g., No ChatGPT)!!
• The ONLY reference materials you can use are … course materials and text.
o Include 1 source from the course materials and 1 source from the text for EACH question. (Minimum of 2 sources for EACH question.)
• You must cite sources within the page (at the appropriate spots). Be specific.
o Course – indicate the Module and the Lesson number. Examples –
 [Mod 1 Lesson #4 video (Suhas Kulkarni)]
 [Mod 2 Lesson #2 (Pacific Exchange rate service data]
 [Mod 3 Lesson 3 article (WSJ – “China Increases Trade”)]
o Text – [Text page #]
o Don’t write out the name of the textbook.
• You will be graded on your ability to ANALYZE. This isn’t cut and paste. Use the reference material to explain / analyze / draw connections. Justify your answers based on the material from lecture or the textbook. Expand and explain.
• It should be very clear … there is no way that AI could have generated your answer.

Question 1
Provide commentary about the behavior of your currency during the project period. Based on what you learned in the course material and text, why did the currency fluctuate in the manner it did? You can also reference current events. (Max of 1/2 page – single spaced.)

Question 2
What is one thing you personally purchase or plan to purchase that is (or can be) impacted by currency fluctuation? Based on what you learned in the course material, explain how currency fluctuation impacts this item. (Max of 1/2 page – single spaced.)

Question 3
Based on course materials, what is your prediction for this currency in the next 5 years? Will it appreciate or depreciate? Why? (Max of 1/2 page – single spaced.)

Project Format –
At the top of Page One, provide the following paragraph.
• I selected this currency ______ .
• I predicted it would … appreciate (go up) OR depreciate (go down) relative to the US dollar.
• My strategy was to … go long (buy foreign currency) OR go short (borrow foreign currency, sell it immediately to repurchase it later).
• My prediction (position) was correct/incorrect.

Sources
• Ch. 7 of the text and Module 2 materials (Week 1).
• Online resources that you find through your own research.
• Some of the useful on-line resources are: Pacific Exchange Rate Service; Universal Currency Converter; Yahoo Finance/currencies; World Currency Symbols; The Wall Street Journal currency markets section