Finance
Key movements of USD against GBP since Jan2013 refer inflation, interest, exchange rates. Hedging.
1) Discuss and analyse the movements in value of the US dollar against the UK pound since January 2013.
*Note: The crucial thing is what would the key movements over that period? And identify why they occurred. Refer to
economic fundamentals to look at inflation, interest rates, exchange rates and other factors. You may mention about the
recent UK election impacted on the exchange rates. You can get the information from various sources: Central Bank, IMF,
OECD etc.
2) From the perspective of a US exporter due to receive £4 million from a customer in the UK in five months’ time:
(a) Estimate the value of the $US/£ in five months’ time. At least three estimation techniques should be used.
Critically discuss your estimates.
(b) Illustrate with hedging examples, and recommend, how the US exporter might protect the contract from foreign
exchange risk.