Organisations involved in international trade and investment seek economic and political stability. For this reason it is prudent for those organisations to conduct a country risk analysis - an analysis of a country's economic and political environment. Political and economic instability is often reflected by adverse and volatile currency fluctuations. A depreciating currency makes foreign goods more expensive for exporters and reduces financial remittances for investors. During the late 1990s, an investment, debt, and currency crisis occurred throughout the east-Asia region that resulted in various levels of intervention by the International Monetary Fund (IMF). Currently, there is a debt crisis emerging in Europe that has already affected Greece and Ireland and again the IMF is involved in devising rescue plans and assistance. One of the major differences between the two regions, economically, is the existence of a commonly traded currency in the affected European countries.
For this assignment you are required to research and report on financial and economic data for two counties in Asia or Greece and Ireland in Europe:
1. Provide an executive summary of your findings. This section is not an introduction and a conclusion at the end of the report is not required.
2. Provide a background to either crisis:
For students researching the Asia Crisis, a National Bureau of Economic Research working paper - NBER 6833 - by Corsetti, Pesenti, and Roubini (1988) has been placed in the assessment folder on Blackboard.
For students researching the European Crisis, you are recommended to conduct searches on eu.eu, imf.org, economist.com, businessweek.com and other academically accepted sources.
3. Research and write on currency theory - with examples and graphs relevant to your selected countries - the impacts of:
i. GDP growth rate differentials on currency values
ii. inflation rate differentials (between countries) on currency values
iii. interest rate differential on currency values
Example: If Singapore has a higher rate of economic growth than the US, consumers in Singapore can be expected to purchase more foreign goods and this will put downward pressure on the value of the Singapore dollar compared to the US dollar as Singaporeans sell their domestic currency and buy US dollars.
(You are required to include a graph under your example).
For this section you are required to cite theory from at the major text or at least one of the recommended texts in the unit outline.
For this assignment you are required to:
1) Prepare a report and not an essay - do not write an introduction and/or conclusion.
2) Clearly number and identify each part of the report you are answering. The use of dot points in the report is acceptable to stay within the word limit.
3) Define any financial/economic terminology used and explain relevant academic theories that support assertions that you make in your report.
4) Avoid the use of first party pronouns and colloquialisms in your report. In-text reference and list all sources in QUT Harvard style or APA style.
5) Use only academic texts and refereed journals, recognised newspapers and magazines, original government and trade agency websites. Non-refereed sources such as wikipedia.com, investopedia.com, and automated graphing using tradingeconomics.com are not to be used.
6) Follow the Assessment Criteria guidelines as to length, format, and submission requirements.
Non-compliance to the above requirements, in part or full, will result in a forfeiture of all marks for structure, grammar, and referencing contained on the CRA. Students whose first language is not English will not be penalised for grammar errors, however, are recommended to have your assignment read by a fluent English speaker/writer before submitting.