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Predicting Exchange Rates

Dorchester Inc. has asked you to help forecast exchange rates for the three potential countries you have selected for your proposal. First plot exchange rates from the past year and try to identify patterns that can be projected into the future. What exchange rates do you predict for 1 year from now?

1. China

2. Malaysia

3. Czech Republic

Solution Preview

Projecting the exchange rates for the Chinese Yuan:

Date Period Chinese Yuan to US dollar
2-Jan-12 1 0.158655
1-Feb-12 2 0.158567
1-Mar-12 3 0.158743
2-Apr-12 4 0.158870
1-May-12 5 0.158451
1-Jun-12 6 0.156996
2-Jul-12 7 0.157515
6-Aug-12 8 0.157300
7-Sep-12 9 0.156930
6-Oct-12 10 0.156950
6-Nov-12 11 0.156950
6-Dec-12 12 0.156780

Based on the trend line equation of y=-0.000x + 0.159, we can forecast the exchange rate.
Note: Y- refers to the exchange rate of the Chinese Yuan to US Dollar

Date Period Chinese Yuan to US ...

Solution Summary

The solution projects, using trend line equation, the exchange rates of the Chinese Yuan, Malaysian Ringgit, and Czech's Koruna vis-a-vis the US dollar one year from today.