...Final market report- Foreign exchange rate Group 4- Team 5 Bui Ai Phuong- s3445871 Nguyen Ha Phuong- s3445955 Nguyen Thi Minh Tam- s3360710 Bui Khac Xuan- s3342375 Table of contents Introduction 3 Market past performance 3 USD/VND exchange rate 3 AUD/USD exchange rate 4 Analysis of historical macro factors 4 GDP 4 Interest rate 6 Inflation rate 7 Government Intervention 8 Commodity Price 9 Market view and forecasting 10 GDP 10 Interest Rate 10 Inflation Rate 11 Commodity Price 12 Trading strategy 12 Risk anticipation 13 Conclusion 13 References 13 Introduction Vietnam bank for industry and trade- Vietinbank was established in 1988, after the separate from the State Bank of Vietnam. Over more than 20 years of development and growth, Vietinbank is one of the largest commercial bank, holding key role in the current market in Vietnam. As a foreign exchange dealing team working for Vietinbank, in this report, we will first explain the behavior of two currency pair: AUD/USD and USD/VND from 2013 to 2014 by analyzing some historical macro factors that affect the foreign exchange rate during the period. And then we will explain the behavior of these exchange rates over the next six months, after that undertake foreign exchange trading strategies to achieve maximum profit for Vietinbank. Market past performance USD/VND exchange rate According to the graph, in the first three quarter of the year 2013, USD/VND rate flutuated...
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...and discussed thoroughly. Case study overview GM had high expectation on annual volume once they started the operation in selling Opel brand cars via its 20 dealers (Sprink 2013). Moreover, they have a strong confidence to keep a long - term prosperity in the future (Sprink 2013). Unfortunately, their sales turned out to be disappointed at the end of June 2013 (Sprink 2013). However, the Australian segment market has become more competitive, which brought more pressure on the price of Astra small car—one of the Opel car models—because the rivals sold the same type of car at around $20000 that the Opel Australia cannot meets, even if it has already struggled to lower the price (Dowling 2013). Besides, a high Australian dollar would weaken the competitive strength of local company against imports (Tschampa 2013). During the first financial year, the company only sold less than 2000 Opel brand cars in Australia by June 2013 and claimed a hasty exit when the Australian market rendered unprofitable. Critical analysis of decision-making traps Just before Opel arrived in Australian auto market, its senior management has announced a surprising...
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...The Australian Industry Group Business prospects in 2013: Australia’s gap year? februAry 2013 national CEo survEy: Principal contact person for this report: Julie Toth Chief Economist THE AUSTRALIAN INDUSTRY GROUP Direct Tel: (03) 9867 0124 Julie.Toth@aigroup.asn.au This report was produced with financial support from the Government of Australia’s Productivity, Education and Training (PET) Fund. © THE AUSTRALIAN INDUSTRY GROUP, 2013 The copyright in this work is owned by the publisher, The Australian Industry Group, 51 Walker Street, North Sydney NSW 2060. All rights reserved. No part of this work covered by copyright may be reproduced or copied in any form or by any means (graphic, electronic or mechanical) without the written permission of the publisher. ISBN 978-1-921768-44-6 2 Ai Group National CEO Survey 2013 Business prospects in 2013 Australian Industry Group National CEO Survey Business prospects in 2013: Australia's gap year? Ai Group National CEO Survey 2013 Business prospects in 2013 3 Key messages Business prospects in 2013: Australia's gap year? The Australian economy is going through significant change, with multiple, long-term forces restructuring our economy (such as global growth shifts and our own demographic changes), and ongoing challenges in our immediate outlook (such as the high Australian dollar and our relatively high business cost base). Recent drivers of growth are waning, with capital investment by the mining industry due to peak soon...
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...Is Australian dollar is substantially overvalued? No. As we know, the BMI is based upon the price of a Big Mac in one country relative to another country, and comparing that with their exchange rate. However, is the BMI a reliable method? It has a major flaw; that of which it does not account for non-tradable goods. The index assumption that the costs of the goods are the same and purchasing power parity would hold, but that is not always the case. The BMI fails to account for non-tradable goods, such as tax, transaction costs, wages and rent. Even if the prices of tradable goods are said to be equalised via arbitrage, they are still subject to regulations, subsidies and trade barriers that might warp the costs. This biases can distort the perceived valuation. Another point that we shall look at would be in the following graph of the exchange rate within the last 10 years. As we can see, there has been an upward trend barring the financial crisis. This might point to the fact that the adjusted BMI that is using past data is might be biased towards a lower relative PPP, and does not account for the sustained growth trend that we have experienced. A new valuation of relative PPP should be considered, considering that Australia’s core commodities market is still going relative strong, despite China’s growth slowdown. <http://www.abc.net.au/lateline/content/2012/s3447302.htm> One could argue that the USD, having being shaken by the financial crisis, would be weak. As the...
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...(Edge, R., 2006) All these factors have increased the demand for the Australian dollar. But situations can not be sustained for ever; it is believed that commodity prices at least will continue to rise for the next two years. Interest rates have risen recently but may not rise again this year. The recent rate rises in Australia and rising global oil prices may reduce demand and slow business profits at least in non-resource industries. 3.2 Threat to Australia Balance of Paymentsreasons can be that rising terms of trade due to record high commodity prices, high levels of business profits lifting share market prices and with a relatively high interest rate. (Edge, R., 2006) All these factors have increased the demand for the Australian dollar. But situations can not be sustained for ever; it is believed that commodity prices at least will continue to rise for the next two years. Interest rates have risen recently but may not rise again this year. The recent rate rises in Australia and rising global oil prices may reduce demand and slow business profits at least in non-resource industries. 3.2 Threat to Australia Balance of Payments reasons can be that rising terms of trade due to record high commodity prices, high levels of business profits lifting share market prices and with a relatively high interest rate. (Edge, R., 2006) All these factors have increased the demand for the Australian dollar. But situations can not be sustained for ever; it is believed that commodity...
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...3. What additional information, not presented in the case, should be auditors have considered when evaluating Hardy-Morgan’s ability to continue as a going concern? First of all, the competition of the furniture industry should be considered. Without the design part, Hardy-Morgan is just like the K-Mart and Target. However, the strength of these two supermarkets makes it impossible for Hardy-Morgan to compare with as there are no differential products between them and obviously K-Mart and Target own large economies of scales. What’s more, in this industry, a very successful global brand gains popularity among customers in Australia, that is IKEA. For most consumers, IKEA will be their first choice as its unique and fashionable design and affordable price. IKEA targets its market to the middle class by providing not only the furniture but also the complete household goods with frugality. Today’s IKEA is not just running as a furniture store, consumers are able to buy any household goods like electronics and appliances even the candlesticks in IKEA. Anyway, the industry competition mainly derives from two sources, band advantage of those large supermarkets, like K-Mart and Target, also, price advantage of IKEA, which is global brand with constant dropping price (2%-3% annually) to provide the best values for customers. Secondly, the economy of Australia will serve as an important factor. The outbreak of the worldwide financial crisis in 2008 has caused the depression and...
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...The issue have been arise by the current high value of Australian dollar. This has reduced the cost of imports in the domestic market and cause high operating cost in Australia, some car-producing countries significant devaluing their currency, effectively making car imports into Australia even cheaper. The effect of the closure of the Australian automotive manufacturing can damage the long-term productivity capacity of Australia economy. The Australia economy would be smaller if automotive manufacturing left the country. The country will import more than export and lack of international competitiveness and heavy reliance on capital goods from overseas(Ruhul&Harry,2009)might increase Australia's current account deficit in the future.At the same time Australia will be heavily impacted with a long-term fall in gross domestic product (GDP) that cause by low investment and low expenditure. The evidence show manufacturing shared 8.4 per cent in Australia GDP in 2013 ( Joaquin, 2013).On the other hand the Australian automotive manufacturing receive small amount money of government support compared with others countries. It is also small compared to the economic activities generated by local automotive manufacturing. Furthermore, the Australian produce car more for domestic purchase than export. It show that there may be some gain from the lost, as the car retailer can supply cheaper car as the production cost overseas are inexpensive compared to Australia and all the money that...
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...Tutorial 7 (Week 11) 1 Tell whether each of the economic actors in the following list would be suppliers or demanders in the foreign exchange market of Australian dollars: (a) an Australian tourist in Europe: = supplier of AUD (b) a Japanese firm exporting to Australia = supplier of AUD (c) a U.K. investor who wants to buy Australian stocks = = demander of AUD (d) a U.K. tourist in Australia = demander of AUD (e) a German firm importing from Australia = demander of AUD (f) an Australian investor who wants to buy real estate in America = supplier of AUD 2. Explain whether each of the following changes would tend to appreciate or depreciate the Australian dollar, using supply and demand curves for the foreign exchange market to illustrate your answers: (a) higher interest rates in Japan Japan is reducing the supply of Japanese YEN depreciate the AUD in comparison to the YEN. (b) faster economic growth in Japan Appreciate the AUD in comparison to the YEN as the Japanese will have more money to spend on Australian goods (c) a lower rate of inflation in Australia relative to other countries Appreciate the AUD relative to other countries (d) a tight U.S monetary policy Depreciate the AUD in comparison to the US dollar (e) a tight monetary policy in Australia Appreciate the AUD in comparison to other countries f) an expansionary fiscal policy in Australia If the government increased spending this may put pressure...
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...The Australian Proof 1930 Penny History of the Holey Dollar, Dump and 1778 Holey Dollar Fewer than 300 Holey Dollars are known to exist. These coins were originally made using various imported Silver Spanish Dollars. Holes were punched through the dollars, creating two Australian coins. The ring became the Holey Dollar while the punched out portion became the Dump. The 1778 Holey Dollar on exhibit experienced 35 years of circulation before getting punched and converted to an Australian dollar. However, as you can see, the very outer ring shows very good detail just as the inner, re-stamped ring. That alone makes it extremely rare. Current Coinage Each Australian dollar is composed of 100 cents. The smallest coin in current circulation is equal to five cents, the one and two cent coins having been discontinued in 1990-92 and withdrawn from circulation. (Cash transactions are usually rounded to the nearest multiple of five cents, although some merchants round down instead.) The coins that became effective throughout the 1980s and 1990s and are currently in use are as follows: One Dollar coin (first issued 1984) - a coin featuring five kangaroos and Elizabeth II - gold coloured Two Dollar coin - (first issued 1988) - a coin featuring an Aboriginal elder and Elizabeth II - gold coloured Five cent - smallest "silver" coin featuring an echidna Ten cent - a lyrebird Twenty cent - the platypus Fifty cent - the Australian coat of arms. 10 Shillings (1939) 10 Pounds...
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...The Australian mining tax is better known as the mineral resource rent tax. This tax is a tax on profits generated from the exploitation of non-renewable resources within Australia. The tax takes 30 per cent on all mining profits that exceed the Government Bond Rate in addition to the usual company income tax, when profits exceed $75 million. The reason this tax should be deemed so appealing to the people of Australia is because it will help to address the imbalances in the economy, while sharing the profits with the Australian people. The average worker would gain an extra $450 per year and tax breaks will be more available to small businesses. Also, within the first three years this mining “super tax” is expected to raise $10.6 billion, which would help to boost the economy and bring the GDP of Australia up by 0.7%. The mining companies pay royalties to the states in which the minerals are being mined. There became a strong demand for these natural mineral resources and the demand led to an increase in the dollar. Recently, the cost of minerals has skyrocketed, yet the royalty payments did not rise quickly enough; calling for the need for this mining tax to be implemented to ensure that the Australian people were receiving a greater share of the profits from the money being made from mining. Economy theory fit with the topic? Comparative Advantage: Countries should specialize where they have their greatest absolute advantage (if they have absolute advantage in both goods)...
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...Executive Summary James Hardie is the largest manufacturer of fiber cement products and systems for internal and external building construction applications in the United States, Australia, New Zealand and the Philippines. Through significant research and development expenditure, James Hardie developed key product process technologies that provide James Hardie a competitive advantage. Financial crisis had a significant impact on the construction industry. USA is the largest market of James Hardie, its demand for new building construction and renovations near historic lows. However, operation in Asia-Pacific region reflects a strong customer market and significant expenditure on R&D provides it with competitive advantages. These are all the strengths James Hardie has when facing extreme shifts. Foreign exchange risk is considered as one major financial risk for the company. The volatility of AUS/USD exchange rate significantly affected corporation costs that incurred in AUD but reported in USD. It is suggested to a use forward rate agreement to hedge over 71% of Asbestos-related asset and liabilities that are not naturally hedged. Commodity Price risk is another significant financial risk for the group. Pulp demonstrated more price sensitive than other input and its price had been extremely volatile the past few years. Recent high commodity price resulted in significant increase in cost of sales and decrease in profit margin. A pulp call option is recommended to ensure...
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...how the European Central Bank (ECB) to permanently increase the money supply will have a direct affect on the domestic Australian economy. This form of carry trade behavior will cause instability in the domestic exchange rate to which the Reserve Bank of Australia (RBA) can respond with an appropriate policy. BODY: * European Central Bank action To understand the full extent of the carry trade, we must appreciate the operations of the ECB in managing the money supply and effectively stimulating necessary changes to proceed with a carry trade strategy. The ECB having direct control of the money supply enables them to increase the money supply through looser monetary policy, for example. This is seen graphically in Figure 1 of appendix A [krugman, Obstfeld & Melitz, 2012]. From the graph we can see the Australian money market is initially at equilibrium at point 1 and the foreign exchange market at 1’, equating to an exchange rate of E$/€1. Now with the ECB action we illustrate the increase in money supply by a shift to the left of the expected Euro interest rate. Foreign exchange market equilibrium is now at point 2’ with a new exchange rate at E$/€2. Hence the Euro depreciates against the Australian dollar. The expected dollar return of Euro deposits is now lower and hence less attractive in comparison with the more lucrative Australian dollar deposits [krugman, Obstfeld & Melitz, 2012]. This creates the situation whereby investors can borrow a financial...
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...continuing demand for resources Table of Contents Executive Summary3 1. Introduction4 1.1 Overview of the task4 1.2 Report purpose and structure4 2. Australian economy5 2.1 Introduce stimulus package 5 2.2 Government’s guarantees 5 2.3 Mining Boom5 3. Australian economic growth6 3.1 Investment of mineral resources 6 3.2 China’s economic development6 3.3 Low interest rates6 4. Australian economic vulnerabilities (weaknesses)7 4.1 Crisis in banking sector of European and United States 7 4.2 Development slowdown in China7 4.3 Global Climate 7 5. Recommendation8 5.1 Recommend and supporting reason8 Reference List9 Executive Summary The purpose of this report is to explore and analyse the topic of ‘Australia’s economic growth relies on Asia’s continuing demand for resources’. This has been done by finding Australian economy, Australian economic growth and the vulnerabilities of its economy. This report has found out that Australian economy able to cope crisis because of the stimulus package, government’s guarantees and mining boom. For the growth of demand in mineral resources are affected by the investment, China’s economic development and low interest rates. Nevertheless, there’re several vulnerabilities of Australian economy which are slowdown in China, crisis in European and US and the climate. The report recommends that diversify its industries and export markets will be the best...
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... | | | | | | | | | | | | | | | | | | | | | | | | | | | Simple comparison Currency in millions of Australian dollars the total revenue in 2013 is $15,902.00 compared with $15724.00 in 2012, followed by $14613.00 in 2011. Qantas seen a relatively flat in the revenue. Gross profit in 2013 is $4315.0 with $4181.0 in 2012, followed by $3939.0 in 2011. Net income in the consecutive three years are 5, -245, 250. There is an dramatic fluctuation appeared. Ratio analysis |Year/ratio |2011 |2012 |2013 |Industry average | |Current ratio |0.90 |0.77 |0.82 | | |Quick ratio |0.78...
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...its other offerings such as flight bookings. "That online growth has definitely slowed. But for us, we basically just operated in one sector ... so we have huge opportunities to grow," he said, citing bookings for flights and package holidays. While the company has historically benefited from a weaker Australian dollar, MrBlume said he would not rely on it to boost earnings from its domestic operations in the new financial year. "I will not sit here and wait for Australian consumers to do more domestic travel." Wotif, whose sites include lastminute.com and latestays.com, is focused on selling accommodation to consumers in Australia. Almost one in 10 room nights in Australia is booked on Wotif's sites, while its online service for flights remains in its infancy. Wotif's Asian business continued to underperform, with travel bookings to the region declining for the fourth consecutive year. Travel to Asia totalled 6 per cent of Wotif's total bookings. Despite the poor performance, MrBlume said he was optimistic the Asian business was close to reaching the bottom. The travel company has not given guidance for the new financial year, although MrBlume conceded the "Australian retail environment continues to be problematic". He indicated Wotif was more focused on growing its existing business than pursuing acquisitions. "We haven't got any...
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