Reference no: EM133852009
International Finance
Assessment Task - Report
Instruction: This assessment requires each student to carry out a systematic analysis on the problem set for this assessment task, and online submit your report via Canvas before the due date. Note that the problem set is designed to check how well you understand the theory and apply it to the real-world issues. It is very much like a mini-research project, requiring you to collect/process published data and perform some analysis.
Question 1: This exercise is to assess your understanding of the relative versions of PPP theory (Maximum word limit: 600 Words): (PGCLO2.4)
Refer to monthly CPI and AUD/USD spot rates, assess if the relative version of PPP held during the period from January 2024 to December 2024. You may make any assumption as necessary. Get expert online assignment help in the USA now!
Evaluate if the Australian dollar in terms of USD was undervalued or overvalued during the period from January through December 2024. Justify and discuss thoroughly what implications to the FX market.
(Note: (1) You must show all steps and detailed workings in your report, including the formulas used for calculations. All references must be appropriately cited. No marks will be awarded for merely providing final answers without the necessary calculations and explanations. Ensure that your work is clearly presented so the process can be easily followed. (2) Check if all the CPI indexes you collected are with the same base year. Otherwise, change the base periods of all the CPI indexes to the same base year. (3) Please tabulate the raw data you collected in Table 1, the processed data (if you have) in Table 2, and all your calculation results in Table 3)
Question 2: This question is to assess your critical thinking and analytical ability (PGCLO2.4)
In a social media post on December 1, 2024, Donald Trump warmed that: "The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S.
Economy. They can go find another "sucker!" There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America."
Write a 600-word critical essay commenting on the above post. It should focus on how to understand Trump's post, what implications to the emerging and global FX markets and the international payment system, how feasible for the US to implement it, and what likely consequences respectively to the US, BRICS and the world. Where appropriate, relate your answers to the theories you have learnt from this unit and cite relevant academic references and sources to back up your analysis.