Currency Market Analysis Assignment

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Currency Market Analysis Assignment
This Currency Market Analysis  Assignment report
described optimized methods for  currency
analysis.
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Content

• Introduction
• Fundamental Analysis
• Economic Indicator
• Gross Domestic Product
• Inflation
• Production
• Imports and Exports

3
Cont.

• Employment
• Business Cycle
• Political Environment
• Technical Analysis

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Introduction

• Currency or money is the most crucial elements of
  economic science. Properly operated, monetary
  system is the life blood of the circular flows of
  income and expenditure. On the other hand a
  malfunctioning monetary system will lead to serve
  fluctuations in the economys level of output,
  employment and prices. Currency which is chosen
  for this assignment is INR or Indian national
  rupees.

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Fundamental Analysis

• To understand the market movements, fundamental
  analysis plays an important role of learning the
  market trends. In the short term, the results do
  not always go along with the fundamental
  analysis. But in the long term, currencies always
  move along with this analysis. This analysis will
  serve you to interpret the reasons behind
  movements.

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Economic Indicator

• An economic indicator represents financial data
  of the economy. It depicts the trends of economic
  activities which influence currencys value. Some
  economic indicators of country are

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Gross Domestic Product

• GDP is defined as the monetary value of all the
  goods and services produced by an economy over a
  specified period generally a year. It influences
  the level of employment, the level of output and
  peoples standard of living. This statistics
  provide important background information on which
  the government can base its decisions.

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Inflation

• Inflation is defined as an increment in general
  level of prices of consumer goods and services
  for a period of time. Wholesale Price Index (WPI)
  and Consumer Price Index (CPI) are two indices
  which represent the rate of inflation. The
  inflation rate means the rate of change of the
  either indices. The rate of inflation indicates
  the rate at which purchasing power of money is
  being eroded.

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Production

• It is a common practice to divide the totality of
  economic activities into three broad groups viz
  Agriculture and related activities, Industry
  and Service. Changes in industrial production
  are reported in the form of changes in an index
  number called Index of Industrial Production
  (IIP). This is a representative figure which
  measures industrial marketing activities in the
  economy.

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Imports and Exports

• Import a good or service consumed in one
  country which has been bought from another
  country. If imports go down then the supply of
  local currency will decrease and hence, increase
  the value of domestic currency. Export an
  economy produces a good or service and sells to
  another economy which is the actual consumer of
  that good or service.

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Employment

• The rate of unemployment is simply the fraction
  or percentage of workforce that has no gainful
  employment. This is a key economic indicator. If
  a country has high unemployment rate that means
  that countrys economy is not able to provide
  jobs for living.

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Business Cycle

• Economic growth is not a continuous process.
  Upswings and downswings are of varying duration
  and intensity and are referred to as cycles.
  Government attempts to smooth out these
  fluctuations with the use of monetary and fiscal
  policies.

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Political Environment

• Recently, India got third position on corruption
  rating which impact a bad impression on foreign
  investors. Corruption scandals have reinforced a
  negative perception on the rest of the world. It
  directly affects its import and exports and
  confidence of foreign investors, which leads to
  depreciation in value of currency.

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Technical Analysis

• Technical analysis is a form of market
  analysis that studies demand and supply for
  currencies based on trading volume and price
  studies. Using charts and modeling techniques,
  technicians attempt to identify the price trends
  in a market. Technical analysis studies the past
  price history and makes future prediction for
  exchange rate. It uses many different methods and
  forms to calculate future exchange rates.

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Thank You
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