Estimate the following for the exchange rates which you have used for Part 3.You are...

Question

Estimate      the following for the exchange rates which you have used for Part 3.You      are required to use the statistics you calculated using the given exchange      rates in the assignment to assess the currency risk faced by VCL and      suggest possible strategies to overcome those.(provides a      summary of estimated statistics in the assignment and submit an EXCEL      worksheet with all detailed calculations. ).     The       weekly exchange rate changes (percentage changes)- (do in the worksheet)   Averages       and standard deviations for weekly exchange rate changes for each       six-month period (starting with 30/06/2018)-(present with the assignment       with your interpretation)   Averages       and standard deviations for weekly exchange rate changes for each XXXXXXXXXXmonth period (starting with 30/06/ XXXXXXXXXXpresent with the assignment       with your interpretation)   Correlation       of weekly foreign exchange rate changes among four currencies in each XXXXXXXXXXmonth and 12-month period - (present with the assignment with your       interpretation)   Using       the VaR in 95% probability, evaluate currency risk faced by the VCL over       time (use the estimated average exchange rate changes and standard       deviations for your calculation). Use the estimated VaR to illustrate the       foreign exchange risk faced by the company in each currency XXXXXXXXXXpresent with the assignment with your interpretation)   Critically       evaluate movements of estimated average and standard deviation values and       the correlation coefficients over time. How such movements are important       in managing foreign exchange risk. You need to link your discussions with       the part 1 and 4 of task three of this assignment. Here, you are required       to elaborate on how the VCL operational results could have been affected       by the recorded exchange rate changes.    Identify      possible internal and external foreign exchange risk management (hedging)      strategies that VCL can use to mitigate the FX risk exposure they faced.      You need to briefly explain the possible advantages and disadvantages of      each strategy you have identified

Mohd · Accepted Answer

L
For the period of two year from start averages for USD and JPY currency rates are negative. 
For the period of one and half year from start averages for INR and THB currency rates are negative.
In the period of july 2020 to December 2020, the average exchange rates for all currencies are maximum throughout the three year period.
For the period of one and half year from start standard deviation for all countries currency rates are approximately constant over the period of time.
In the period of jan 2020 to june 2020, the standard deviation of change in  exchange rates for all currencies is maximum throughout the three year period.
	Period
	Averages
	Standard Deviation
	From
	to 
	 USD 
	 INR 
	 THB 
	 JPY 
	 USD 
	 INR 
	 THB 
	 JPY 
	30-6-2018
	31-12-2018
	-0.14%
	-0.10%
	-0.25%
	-0.21%
	0.0111
	0.0127
	0.0137
	0.0153
	1/1/2019
	30-6-2019
	-0.06%
	-0.06%
	-0.21%
	-0.07%
	0.0086
	0.0107
	0.0159
	0.0115
	1/7/2019
	30-12-2019
	-0.01%
	0.12%
	-0.08%
	-0.03%
	0.0085
	0.0109
	0.0161
	0.0115
	31-12-2019
	30-6-2020
	0.00%
	0.19%
	0.15%
	0.01%
	0.0278
	0.0298
	0.0256
	0.0270
	1/7/2020
	30-12-2020
	0.42%
	0.32%
	0.29%
	0.25%
	0.0124
	0.0115
	0.0135
	0.0125
	31-12-2020
	30-6-2021
	-0.09%
	-0.02%
	0.15%
	0.18%
	0.0121
	0.0110
	0.0119
	0.0108
	Period
	Averages
	Standard Deviation
	From
	to 
	 USD 
	 INR 
	 THB 
	 JPY 
	 USD 
	 INR 
	 THB 
	 JPY 
	30-6-2018
	30-6-2019
	-0.10%
	-0.08%
	-0.23%
	-0.14%
	0.0100
	0.0118
	0.0148
	0.0136
	1/7/2019
	30-6-2020
	0.00%
	0.15%
	0.03%
	-0.01%
	0.

Estimate the following for the exchange rates which you have used for Part 3. You are required to use the statistics you calculated using the given exchange rates in the assignment to assess the...

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