Foreign Exchange Management.docx

DECLARATION I, hereby declare that this Project Report titled

FOREIGN EXCHANGE RATE

DETERMINATION AND ANALYSIS submitted by me to the Department of Business Management M.V.S.R Engineering College, Nadergul, Rangareddy dist. is bonafide work undertaken by me and it is not submitted to other University or Institution for the award of any degree/diploma/certificate or published any time before.

Signature of the student

ACKNOWLEDGEMENT I express my grateful thanks to Dr. G KANAKA DURGA, principal of M.V.S.R Engineering College, Nadergul, Hyderabad. I express my grateful thanks to Dr. M SREE RAMA DEVI, Head of Department of Business Management, M.V.S.R Engineering College, Nadegul, Hyderabad. I convey my sincere thanks to my project guide Dr. N.SRAVANTHI, Professor, Department of Business Management, M.V.S.R Engineering College for giving me valuable inputs and guidance for completion of my project. I express my hearty thanks to all my respondents for their support in my project and all the faculty members, librarians, friends, and others who had helped me in completing my project successfully.

CHAPTER – I INTRODUCTION

CHAPTER – I INTRODUCTION

I. Introduction

1. a) INTERNATIONAL MONETARY SYSTEM The international monetary system consists of institutions and the financial architecture through which cross-border payments are made. Payments are made on the basis of exchange rate, which expresses the value of one currency in terms of another. Countries have different exchange rate systems and country chooses the foreign currency against which its currency is expressed.

b) FOREIGN EXCHANGE MARKET the foreign exchange market is the market where the currency of one country is exchanged for that of another country and where the rate of exchange is determined the genesis of foreign exchange market can be traced to the need for foreign currencies arising from: 1. International trade 2. Foreign investment 3. Lending to and borrowing from foreigners

c) EXCHANGE RATE DETERMINATION Currently, major economic powers in the world (USA, UK, European Union, and Japan) have exchange rates that are fixed by market forces, i.e., the demand and supply of foreign exchange in the foreign exchange market. Theoretically, the value of a country’s currency in terms of the currency of another currency (or the exchange rate) is a function of demand and supply. The demand for foreign exchange arises because of imports, FDI outflows and portfolio investments overseas. The supply of foreign exchange arises from exports, FDI inflows and overseas portfolio investment inflows

But this present state of affairs has reached over a century during which there was a manifold increase in world trade and FDI, the birth of overseas portfolio investment, two world wars, and a transatlantic realignment of global economic power. The USA emerged as a super power with a corresponding accretion to dictate the direction and shape of the international financial system. The evolution of the international financial system up to its present form is inextricably linked to the ebb and flow of US economic fortunes the US dollar has had a central role in exchange rate determination since 1944.

1.2. RESEARCH METHODOLOGY

1.2.i. Objectives

 To discuss the process of foreign exchange rate determination and factors affecting the currency exchange rates.  To analyze the exchange rates between US dollar and Indian rupee for the period 20162018.  To find out reasons for fluctuations in exchange rates of US dollar and Indian rupee for the period 2016-2018

1.2.ii. Period of the Study The data is taken for two years i.e., 2016-2018

3. SCOPE OF THE STUDY In this study exchange rates of US dollar and Indian Rupee are considered as US dollar is a global currency and Indian Rupee was fluctuating highly with regard to US $.The reasons for fluctuations are discussed in detail. In this project only macro economic factors such as interest rates, inflation rates, current account deficit, terms of trade, political stability, recession are considered This study will be helpful in understanding the spot exchange rate of currencies and their fluctuations. .

4. Sources of data collection Data is collected from secondary sources such as 

Websites

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Text books

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Journals

5. Techniqes of analysis Data is represented in the form of tables, graphs and charts Statistical tools mean, range, standard deviation are used to analyze the data

CHAPTER -2

2.1. INTERNATIONAL MONETARY SYSTEM The international monetary system consists of institutions and the financial architecture through which cross-border payments are made. Payments are made on the basis of exchange rate, which expresses the value of one currency in terms of another. Countries have different exchange rate systems and country chooses the foreign currency against which its currency is expressed.

EVOLUTION OF INTERNATIONAL MONETARY SYSTEM There has been a rapid growth of international monetary system over the period. It has successfully tackled periods of stresses and strains. It has passed through a period of transition from the system of fixed exchange rates to the system of floating rates. Gold exchange standard was the first major step towards the establishment of an international monetary system. This system was put into effect in 1850. The participants were the UK, France, Germany, and the USA. In this system, each currency was linked to a weight of gold. The system was institutionalized at the conference of Genes in 1922. Since gold was convertible into currencies of major developed countries, central banks of different countries either held gold or the currencies of these developed countries. But after the conference of Genes (1922), there was tremendous speculative activity accompanied by economic crisis, high inflation in the Germany, protectionism following the crisis of 1929, competitive devaluations for providing impetus to exports, and finally the Second world war.

THE SYSTEM OF BRETTON WOODS (1944-1971) A conference was held at Bretton woods in the USA, in July 1944, in order to put in place a new monetary system. The major objectives of this conference were 1. To review the existing rules 2. To devise a system to encourage international monetary cooperation 3. To establish an international institution to ensure good functioning of the system Main characteristics of international monetary system developed at Bretton woods can be summarized as follows-

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Fixed rates in terms of gold (i.e. a system of gold standard), but only the US dollar was convertible into gold as the USA ensured convertibility of dollars into gold at international level

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A procedure for mutual international credits

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Creation of International Monetary Fund (IMF) to supervise and ensure smooth functioning of the system. Countries were expected to pursue the economic and monetary policies in a manner so that fluctuations of currency remained with in a permitted margin of ±1 percent. That is, the central bank of every country had to intervene to buy or sell foreign exchange depending on the need

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Devaluations or reevaluations of more than 5 percent had to be done with the permissions of the IMF. This measure was necessary to avoid chain devaluations like the ones which occurred before the Second World War.

THE INTERNATIONAL MONETARY SYSTEM SINCE 1971 The system of Bretton woods worked satisfactorily for many years but difficulties started from 1958 when the trade balances of the USA became highly negative and a very large amount of US dollars was held outside the USA; it was more than the total gold holdings of the USA. Anticipating a devaluation of the US dollar, speculators bought gold while other governments demanded conversion of US dollars into gold. To remedy this situation, a “gold pool” was established with the cooperation of the UK, France, Germany, Italy, Belgium, Netherlands, Switzerland .the gold pool was used to sell gold to maintain its price at $35 per ounce. In return, the USA was expected to improve its external trade. But since the US could not reduce its trade deficit, some of the European countries started demanding again for conversion of their dollar holdings into gold. Finally, the “gold pool” arrangement broke down. Eventually, a series of devaluations and speculations lead to breaking down of the fixed rate system of Bretton wood system. On 15 august, 1971 president Nixon of the USA suspended the system of convertibility of gold and dollar. For some time, the system of fixed rate with an adjustment margin of ±2.5% was tried but did not work. Finally the fixed rate system was abandoned and the floating rate system came into effect.

In December, 1971 the Smithsonian agreement was signed at Washington its major features were

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Devaluation of the dollar and the revaluation of the other countries currencies; gold passed from $35 per ounce to $38

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New fluctuations margins; changing from ±1% to ±2.25%;

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Non convertibility of the dollar. In 1973 another devaluation of the dollar took place petrol shock added to the international monetary crisis exchange rates became volatile. In 1976, Jamaica agreements were signed focusing on the: 

Legalization of the floating exchange rate

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Demonetization of gold as the currency of reserves.

Thus, the part of quota which was hitherto required to be deposited in the gold could be deposited in foreign exchange. At the same time, the IMF sold one-third of its gold reserves. In 1977 and 1978 in the wake of inflation in the USA, the dollar further depreciated. The Federal Reserve practised a strict monetary policy. Between 1980 and 1985, the dollar appreciated but at the same time the American BOP situation deteriorated. Now, the members of G-7 meet from time to time to coordinate the policies so that the exchange rate stability can be maintained. But, this coordination is not always successful. Nevertheless, their meeting regularly has an effect of avoiding protectionist tendencies on the part of any one or more of them.

2.2 DIFFERENT TYPES OF EXCHANGE RATE SYSTEMS International Monetary Fund (IMF) identified different exchange rate system followed in different countries across the world. IMF has outlined eight exchange rate system followed by the countries in the world which are as follows 1. Exchange arrangement with no separate legal tender 2. Currency board 3. Pegged exchange rate 4. Pegged exchange rate with horizontal bands 5. Crawling peg 6. Crawling band 7. Managed float 8. Independent floating exchange rate

1. Exchange arrangement with no separate legal tender Some countries chooses another country’s currency as legal tender Example: Micronesia and San Marino selects other country’s currency as legal tender

2. Currency Board Central bank of the country assures the conversion of domestic currency into particular foreign currency for a specified number of units at any time . for this purpose central bank should hold foreign exchange reserves in the selected foreign currency

When the holders of domestic currency loses confidence in it as a medium of exchange due to uncontrollable inflation, government debt and recession, then the government decides to adopt a “Currency Board” which revives faith in the domestic currency Example: Argentine peso,pegged against the united states dollar from 1991-2002 Bahraini dinar, fixed against the pound sterling from1966-1973 Bahamian pound, fixed against pound sterling from 1921-1966 3.FIXED EXCHANGE RATE: Face value of the domestic currency is set in accordance with the selected foreign currency. This face value does not change and remains constant. The exchange rate changes within a range (i.e., ±1% of the face value) fixed exchange rate is also known as pegged exchange rate. 4. PEGGED EXCHANGE RATE WITH A HORIZONTAL BAND: Pegged exchange rate with a horizontal base in an exchange rate system in which the fluctuations in the exchange rates are manufactured by central bank within a specified range or not specified range. The specified band can be one sided or a narrow range or a broad range.

5. Crawling peg: The face value of the domestic currency is adjusted in accordance with the selected foreign currency and is readjusted periodically as per the predetermined criteria like the change inflation. The main advantage of the crawling peg is that it responses immediately to the market value of the domestic currency.

6. Crawling band: Crawling band is the domestic currency which is on crawling peg and is maintained within a range.

7. Managed float: Monetary authorities under this system affect the exchange rate either by direct or indirect intervention without defending the target exchange rate.

8. Independent float: Independent float is also known as free float or clean float. Market forces determines the flexible exchange rate that allows faster adjustments and shows changes in the macroeconomic factors like changes in inflation rate, growth rate and interest rate. There is higher variability in the short run as well as in long run exchange rate. The major disadvantage of this system is that the exchange rare risk is increased due to the floating exchange rate. This makes the forecasting of exchange rates significant and complicated issue.

2.3 FOREIGN EXCHANGE MARKET A Foreign exchange market is a market in which currencies are bought and sold. It is to be distinguished from a financial market where currencies are borrowed and lent.

General Features Foreign exchange market is described as an OTC (Over the counter) market as there is no physical place where the participants meet to execute their deals. It is more an informal arrangement among the banks and brokers operating in a financing centre purchasing and selling currencies, connected to each other by telecommunications like telex, telephone and a satellite communication network, SWIFT. The term foreign exchange market is used to refer to the wholesale a segment of the market, where the dealings take place among the banks. The retail segment refers to the dealings take place between banks and their customers. The retail segment refers to the dealings take place between banks and their customers. The retail segment is situated at a large number of places. They can be considered not as foreign exchange markets, but as the counters of such markets. The leading foreign exchange market in India is Mumbai, Calcutta, Chennai and Delhi is other centers accounting for bulk of the exchange dealings in India. The policy of Reserve Bank has been to decentralize exchanges operations and develop broader based exchange markets. As a result of the efforts of Reserve Bank Cochin, Bangalore, Ahmadabad and Goa have emerged as new centre of foreign exchange market.

Size of the Market Foreign exchange market is the largest financial market with a daily turnover of over USD 2 trillion. Foreign exchange markets were primarily developed to facilitate settlement of debts arising out of international trade. But these markets have developed on their own so much so that a turnover of about 3 days in the foreign exchange market is equivalent to the magnitude of world trade in goods and services. The largest foreign exchange market is London followed by New York, Tokyo, Zurich and Frankfurt. The business in foreign exchange markets in India has shown a steady increase as a consequence of increase in the volume of foreign trade of the country, improvement in the communications systems and greater access to the international exchange markets. Still the volume of transactions in these markets amounting to about USD 2 billion per day does not compete favorably with any well developed foreign exchange market of international repute. The reasons are not far to seek. Rupee is not an internationally traded currency and is not in great demand. Much of the external trade of the country is designated in leading currencies of the world, Viz., US dollar, pound sterling, Euro, Japanese yen and Swiss franc. Incidentally, these are the currencies that are traded actively in the foreign exchange market in India.

24 Hours Market The markets are situated throughout the different time zones of the globe in such a way that when one market is closing the other is beginning its operations. Thus at any point of time one market or the other is open. Therefore, it is stated that foreign exchange market is functioning throughout 24 hours of the day. However, a specific market will function only during the business hours. Some of the banks having international network and having centralized control of funds management may keep their foreign exchange department in the key centre open throughout to keep up with developments at other centers during their normal working hours In India, the market is open for the time the banks are open for their regular banking business. No transactions take place on Saturdays.

Efficiency Developments in communication have largely contributed to the efficiency of the market. The participants keep abreast of current happenings by access to such services like Dow Jones Telerate and Teuter. Any significant development in any market is almost instantaneously received by the other market situated at a far off place and thus has global impact. This makes the foreign exchange market very efficient as if the functioning under one roof.

Currencies Traded In most markets, US dollar is the vehicle currency, Viz., the currency used to denominate international transactions. This is despite the fact that with currencies like Euro and Yen gaining larger share, the share of US dollar in the total turn over is shrinking.

Physical Markets In few centers like Paris and Brussels, foreign exchange business takes place at a fixed place, such as the local stock exchange buildings. At these physical markets, the banks meet and in the presence of the representative of the central bank and on the basis of bargains, fix rates for a number of major currencies. This practice is called fixing. The rates thus fixed are used to execute customer orders previously placed with the banks. An advantage claimed for this procedure is that exchange rate for commercial transactions will be market determined, not influenced by any one bank. However, it is observed that the large banks attending such meetings with large commercial orders backing up, tend to influence the rates

Participants The participants in the foreign exchange market comprise;

1. Corporates The business houses, international investors, and multinational corporations may operate in the market to meet their genuine trade or investment requirements. They may also buy or sell currencies with a view to speculate or trade in currencies to the extent permitted by the exchange control regulations. They operate by placing orders with the commercial banks. The deals between banks and their clients form the retail segment of foreign exchange market. In India the foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000 permits retention, by resident, of foreign currency up to USD 2,000. Foreign Currency Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 requires a resident in India who receives foreign exchange to surrender it to an authorized dealer: (a) Within seven days of receipt in case of receipt by way of remuneration, settlement of lawful obligations, income on assets held abroad, inheritance, settlement or gift: and (b) Within ninety days in all other cases.

Any person who acquires foreign exchange but could not use it for the purpose or for any other permitted purpose is required to surrender the unutilized foreign exchange to authorized dealers within sixty days from the date of acquisition. In case the foreign exchange was acquired for travel abroad, the unspent foreign exchange should be surrendered within ninety days from the date of return to India when the foreign exchange is in the form of foreign currency notes and coins and within 180 days in case of traveller’s cheques. Similarly, if a resident required foreign exchange for an approved purpose, he should obtain from and authorized dealer.

2. Commercial Banks Commercial Banks are the major players in the market. They buy and sell currencies for their clients. They may also operate on their own. When a bank enters a market to correct excess or sale or purchase position in a foreign currency arising from its various deals with its customers, it is said to do a cover operation. Such transactions constitute hardly 5% of the total transactions done by a large bank. A major portion of the volume is accounted buy trading in currencies indulged by the bank to gain from exchange movements. For transactions involving large volumes, banks may deal directly among themselves. For smaller transactions, the intermediation of foreign exchange brokers may be sought.

3. Exchange Brokers Exchange brokers facilitate deal between banks. In the absence of exchange brokers, banks have to contact each other for quotes. If there are 150 banks at a centre, for obtaining the best quote for a single currency, a dealer may have to contact 149 banks. Exchange brokers ensure that the most favorable quotation is obtained and at low cost in terms of time and money. The bank may leave with the broker the limit up to which and the rate at which it wishes to buy or sell the foreign currency concerned. From the intends from other banks, the broker will be able to match the requirements of both. The names of the counter parities are revealed to the banks only when the deal is acceptable to them. Till then anonymity is maintained. Exchange brokers tend to specialize in certain exotic currencies, but they also handle all major currencies. In India, banks may deal directly or through recognized exchange broker. Accredited exchange broker are permitted to contract exchange business on behalf of authorized dealers in foreign exchange only upon the understanding that they will confirm to rate, rules and conditions laid down by the FEDAI .All contracts must bear the clause “subject to the rules and regulations of the foreign exchange dealers association of India”.

4. Central banks Central bank may intervene in the market to influence the exchange rate and change it from that would result only from private supplies and demand the central bank may transact in the market on its own for the above purpose. Or, it may do so on behalf of the government when it buys or sell bonds and settles other transactions which may involve foreign payments and receipts. In India, authorized dealers have recourse to Reserve Bank to sell/buy US dollars to the extent the latter is prepared to transact in the currency at the given point of time. Reserve Bank will not ordinarily buy/SELL any other currency from/to authorized dealers. The contract can be entered into on any working day of the dealing room of Reserve Bank. No transaction is entered into on Saturdays. The value date for spot as well as forward delivery should be in conformity with the national and international practice in this regard. Reserve Bank of India does not enter into the market in the ordinary course, where the exchanges rates are moving in a detrimental way due to speculative forces, the Reserve Bank may intervene in the market either directly or through the State Bank of India

5. SPECULATORS Central banks, commercial banks, corporate and individuals who undertake activity of buying and selling of foreign currencies for booking short term profits by taking advantage of exchange rate moments are known as speculators. They play a very important and active role in the foreign exchange market. In fact a major junk of foreign exchange dealings in the market is due to speculative activities.

TYPES OF FOREIGN EXCHANGE RATES Direct quotes: The direct quote is one in which the home currency fluctuates and the foreign currency against which it is quoted remains constant Given below is an example of direct quotes Note that on one day the exchange rate could be Rs 44/USD, the next day it is Rs 44.30/USD, and the third day it could be Rs 44.40/USD. The home currency fluctuates each day against the dollar and denoted by H/F

Indirect quote: The indirect rate is one in which the foreign currency fluctuates and the home currency remains constant Example: consider the POUND/US dollar which is an indirect rate when the pound is the home currency. The dollar will change from day to day. Thus exchange rate on three successive days may be Day1:1£/1.02USD Day2:1£/1.03USD Day3:1£/1.04USD Note: 1. the indirect t rate is the reciprocal of the direct rate 2. The direct rate is the reciprocal of the indirect rate

Cross rate: a cross rate is the exchange rate between two currencies that are each expressed in terms of a third currency the third currency is called the vehicle currency. Suppose there are three currencies A, B and C. currency B is expressed in terms of A, and currency C is also expressed in terms of A. therefore currency A is the vehicle currency. But currency B and C are not expressed in terms of each other. a cross rate is the exchange rate between currency B and C,using the exchange rates between currencies A and B and currencies A and C B/C=B/A*A/C

Two way quote: a two way quote is that specifies the exchange rate at which an authorized dealer stands ready to buy and sell the foreign currency in a currency pair

Two way quote in direct exchange rate : Consider the following example The rupee/ Canadian dollar rate (INR/CND) given by bank A is INR 33.77-33.79 /CND. This is a two way quote and direct quote because domestic currency is quoted against a fixed amount of foreign currency. The quote can also be expressed as INR 33.77/33.79=1CND. The first rate (INR 33.77)is the bid rate and second rate (INR 33.79)is the ask rate . the rates are interpreted as

1. Rs 33.77 is the rate at which bank A is ready to buy the CND. For every CND it buys, it is prepared to give Rs 33.77 in exchange. This is called buying rate or bid rate 2. Rs 33.79 is the rate which bank A is ready to sell the CND. For every CND it sells it wants Rs 33.79 in exchange. This is called the selling or ask rate (or offer rate) 3. The bid –ask spread is ask rate minus bid rate (33.79-33.77=Rs 0.02)

Two way quote in an indirect exchange rate In indirect quote, the home currency remains constant when the exchange rate changes but the foreign currency varies. In an indirect quote, the bid rate is the rate at which an authorized dealer is ready to buy the currency that is constant (currency H). The ask rate is the rate at which an authorized dealer is ready to buy the currency that is constant (currency H) Example: consider the £/$exchange rate of $1.13-1.12/ £ The bid rate is $1.13/£ and the ask rate is $1.12/£ how is this interpreted? 1. One pound is the rate at which bank A is ready to buy $1.13. or conversely, for every $1.13 it buys , it is prepared to give one pound in exchange , $1.13is called the buying rate or bid rate 2. One pound is the rate at which bank A is ready to sell $1.12. or conversely, for every $1.12 it sells,it is prepared to get one pound in exchange. $1.12 is called the selling rate or ask rate (or offer rate) 3. Bid ask spread =bid rate –ask rate =1.13-1.12=$0.01

Spot rate: The spot rate is the single outright transaction involving the exchange of two currencies at a rate agreed on the date of the contract, for value or delivery (cash settlement) within two business days. The day that deal is struck is called the ‘Trade date’, and the day that the exchange of currencies in the currency pair takes place is called the ‘Value Date ‘or Settlement Date.

Forward rate: The forward rate is a transaction involving the exchange of two currencies at a rate agreed on the date of the contract for value or delivery at some time in future (more than two business days)

FACTORS INFLUENCING EXCHANGE RATES Balance of Payments Balance of Payments represents the demand for and supply of foreign exchange which ultimately determine the value of the currency. Exports, both visible and invisible, represent the supply side for foreign exchange. Imports, visible and invisible, create demand for foreign exchange. Put differently, export from the country creates demand for the currency of the country in the foreign exchange market. The exporters would offer to the market the foreign currencies they have acquired and demand in exchange the local currency. Conversely, imports into the country will increase the supply of the currency of the country in the foreign exchange market. When the balance of payments of a country is continuously at deficit, it implies that the demand for the currency of the country is lesser than its supply. Therefore, its value in the market declines. If the balance of payments is surplus continuously it shows that the demand for the currency in the exchange market is higher than its supply therefore the currency gains in value

Inflation Inflation in the country would increase the domestic prices of the commodities. With increase in prices exports may dwindle because the price may not be competitive. With the decrease in exports the demand for the currency would also decline; this in turn 17would results in the decline of external value of the currency. It may be noted that unit is the relative rate of inflation in the two countries that cause changes in exchange rates. If, for instance, both India and the USA experience 10% inflation, the exchange rate between rupee and dollar will remain the same. If inflation in India is 15% and in the USA it is 10%, the increase in prices would be higher in India than it is in the USA. Therefore, the rupee will depreciate in value relative to US dollar. Empirical studies have shown that inflation has a definite influence on the exchange rates in the long run. The trend of exchange rates between two currencies has tended to hover around the basic rate discounted for the inflation factor. The actual rates have varied from the trend only by a small margin which is acceptable. However, this is true only where no drastic change in the economy of the country is. New resources found may upset the trend. Also, in the short run, the rates fluctuate widely from the trend set by the inflation rate. These fluctuations are accounted for by causes other than inflation

Interest Rate The interest rate has a great influence on the short – term movement of capital. When the interest rate at a centre rises, it attracts short term funds from other centers. This would increase the demand for the currency at the centre and hence its value. Rising of interest rate may be adopted by a country due to tight money conditions or as a deliberate attempt to attract foreign investment. Whatever be the intention, the effect of an increase in interest rate is to strengthen the currency of the country through larger inflow of investment and reduction in the outflow of investments by the residents of the country

Money Supply An increase in money supply in the country will affect the exchange rate through causing inflation in the country. It can also affect the exchange rate directly. An increase in money supply in the country relative to its demand will lead to large scale spending on foreign goods and purchase of foreign investments. Thus the supply of the currency in the foreign exchange markets is increased and its value declines. The downward pressure on the external value of the currency then increases the cost of imports and so adds to inflation. The effect of money supply on exchange rate directly is more immediate than its effect through inflation. While in the long run inflation seems to correlate exchange rate variations in a better way, in the short runexchange rates move more in sympathy with changes in money supply. 18 One explanation of how changes in money supply vary the exchange rate is this; the total money supply in the country represents the value of total commodities and services in the country. Based on this the outside world determines the external value of the currency. If the money supply is doubles, the currency will be valued at half the previous value so as to keep the external value of the total money stock of the country constant. Another explanation offered is that the excess money supply flows out of the country and directly exerts a pressure on the exchange rate. The excess money created, the extent they are in excess of the domestic demand for money, will flow out of the country. This will increase the supply of the currency and pull down its exchange rate.

National Income An increase in national income reflects increase in the income of the residents of the country. This increase in the income increases the demand for goods in the country. If there is underutilized production capacity in the country, this will lead to increase in production. There is

a chance for growth in exports too. But more often it takes time for the production to adjust to the increased income. Where the production does not increase in sympathy with income rise, it leads to increased imports and increased supply of the currency of the country in the foreign exchange market. The result is similar to that of inflation, viz., and decline in the value of the currency. Thus an increase in national income will lead to an increase in investment or in consumption, and accordingly, its effect on the exchange rate will change. Here again it is the relative increase in national incomes of the countries concerned that is to be considered and not the absolute increase

Resource Discoveries When the country is able to discover key resources, its currency gains in value. A good example can be the have played by oil in exchange rates. When the supply of oil from major suppliers, such as Middles East, became insecure, the demand fro the currencies of countries self sufficient in oil arose. Previous oil crisis favored USA, Canada, UK and Norway and adversely affected the currencies of oil importing countries like Japan and Germany. Similarly, discovery oil by some countries helped their currencies to gain in value. The discovery of North Sea oil by Britain helped pound sterling to rise to over USD 2.40 from USD 1.60 in a couple of years. Canadian dollar also benefited from discoveries of oil and gas off the Canadian East Coast and the Arctic.

Capital Movements Capital movements there are many factors that influence movement of capital from one country to another. Short term movement of capital may be influenced buy the offer of higher interest in a country. If interest rate in a country rises due to increase in bank rate or otherwise, there will be a flow of short term funds into the country and the exchange rate of the currency will rise. Reverse will happen in case of fall in interest rates.

Bright investment climate and political stability may encourage portfolio investments in the country. This leads to higher demand for the currency and upward trend in its rate. Poor economic outlook may mean repatriation of the investments leading to decreased demand and lower exchange value for the currency of the country. Movement of capital is also caused by external borrowing and assistance .Large scale external borrowing will increase the supply of foreign exchange in the market. This will have a favorable

effect on the exchange rate of the currency of the country. When repatriation of principal and interest starts the rate may be adversely affected.

Political Factors Political factors Political stability induced confidence in the investors and encourages capital inflow into the country. This has the effect of strengthening the currency of the country. On the other hand, where the political situation in the country is unstable, it makes the investors withdraw their investments. The outflow of capital from the country would weaken the currency. Any news about change in the government or political leadership or about the policies of the government would also have the effect of temporarily throwing out of gear the smooth functioning of exchange rate mechanism.

Methods Of Forecasting Exchange Forecasting Exchange Rates Forecasting future exchange rates is virtually necessity for a multinational enterprise , inter alia, to develop an international financial policy. In, it is useful when the the international firm is to borrow from or invest abroad. Fore3ign investment decision require forecast pertaining to future cash flows, which in turn , will need input of host country’s exchange rate. Above all, exchange rates are decisive in framing hedging policy. Forecasting the Exchange Rate In Short-Term Forecasting the exchange rate is one of the moat difficult areas of international finance. The theories explaining exchange rate variations are not satisfactory to forecast how the rates are going to evolve. Under the circumstance, therefore, recourse is taken to less than perfect methods. The following three methods are generally employed for the purpose . 

Method of advanced indicators

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Use of forward rate as predictor of the future spot rate

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Graphical methods

Methods of Advanced Indicator Several indicators are used for prediction of exchange rates. One important indicator widely used is to determine the ratio of country’s reserve to its imports ,the reserve consists of gold ,foreign currencies and SDRs. The ratio indicates the number of months(N) imports, covered by the reserves(R) N =R/I×12 Let us assume that annual imports of India cost Rs 80 billions and reserves are Rs 30 billions ,the number of months of imports covered by reserves are N=(30/80)*12= 4.5months The general rule that seems to be followed in this regard is that if amounts or reserves is less than the value of 3 month ‘imports ,the currency is vulnerable and may face devaluation.

Use of Forward Rate As Predictor Of Future Spot Rate Some authors believe in the efficiency of markets and consider that forward rates are likely to be an unbiased predictor of the future spot rate. If on 1 January of current year, the 6-month forward rate is Rs 38/US$ the spot rate on 1 July should be Rs 38/US$. In other wards, the rate of premium or discount should be an unbiased predictor of the rate of appreciation or depreciation of a currency

Graphical Methods Since long these methods have been used on exchange market. The objective of making charts or graphs is to gain insight into the trend of fluctuations and forecast the moment when the trend is likely to reserve. Technical analysts consider that the behavior of operators remains stable over period. They identify certain configurations and then forecast

NEED OF THE STUDY Foreign exchange management involves identifying the factors which the foreign exchange rates. Foreign exchange management helps in anticipating the future currency fluctuations. Foreign exchange management also helpful in reducing the different exposures such as economic exposure, translation exposure, transaction exposure etc

SCOPE OF THE STUDY

OBJECTIVES OF THE STUDY To discuss the concept of foreign exchange management and factors affecting the currency exchange rates. To analyze the exchange rate with respective us dollar and Indian rupee for the period 20162018. To find out reasons for fluctuation in exchange rates of us dollar and Indian rupee for the period 2016-2018.

RESEARCH METHODOLOGY Sources of data collection

The data is collected from various websites such as NSE, BSE. The lectures delivered by the persons who actively involved in foreign exchange markets. Various books related to international finance, international business.

The Indian Rupee (INR) has seen a massive downfall in its value in the past few months. Since January, the currency has dropped over 3% in its value against the dollar. Such downgrade was last seen four years ago, before the Lok Sabha elections, when Congress’s term was coming to an end. In 2014, when the BJP came to power, Modi had promised better economic environment, improved trade and lower inflation. All these promises were met, and Indian markets saw a fairly good bull run in the following years. But now, the markets have once again gone bear, coincidently, as BJPs term comes to an end. On Monday, 21st May, the rupee value hit a 16-month low, opening at 68.12 and is expected to fall further to 68.35. Analysts at Angel Broking say that this fall and the one in 2014 can both be attributed to higher oil prices, widening trade deficit, capital outflows, and the strengthening US economy. Let’s explore how these factors affect the currency, in detail, and what it spells for the economy next. Demand and Supply:

The basic laws of economics state that if demand for the dollar in India exceeds its supply, then its worth will go up and that of the INR will come down. Clearly, the need for dollars has risen in India, owing to increased imports for manufacturing. We could, in part, blame the PM’s ‘Make in India’ policy for this. But the truth is that the rupee depreciates every few years due to internal and external economic environment. This is referred to as the economic cycle. see image on left. The world economy goes through these phases every few years, and the demand/supply for products, including currency depends on these cycles. Currently, the world economy is in recession. Wider Trade Deficit:

A trade deficit occurs when a country spends more money on imported goods, but earns less from exporting them. While most nations’ trade bills are usually in deficit, there is a limit beyond which it can hamper economic stability. In India, the trade bill is dangerously close to that limit. In 2018, our imports exceeded the exports by $156.8 billion as compared to $105 in the previous year. As explained earlier, the demand for dollar increases with rising imports. And when more dollars are spent in importing goods, the rupee’s value depreciates. This makes foreign goods more expensive, ideally, discouraging companies from importing. The government may also hike duties and tariffs, to reduce imports of raw materials. This is meant to increase the manufacturing costs, in turn leading to rising prices. For example, Consumer Price Index (CPI) rose to 4.6% in April this year, compared to the average CPI of 3.52% in the previous year. However, efforts to dampen imports are pretty futile in practice. Aditi Nayar, economist at ICRA suggests that the trend of rising imports is unlikely to slow down in the coming months. In fact; the total trade deficit is predicted to be at 1.9% of the GDP by 2019. The Oil Slip Volatility in the Middle East and increasing demand for oil are two major reasons for rising prices. Oil prices are predicted to touch $100 per barrel by 2019, a mark not touched in six years. But despite such rise, India’s crude oil imports are higher than that of any other goods. In fact, in 2017, India imported a record 4.4 million barrels of oil per day, costing a total of $88 billion. And with oil prices soaring, this figure is pegged to rise by 25% in the next financial year. If that happens, India will need more dollars to meet their growing demand, which will, in turn, affect the rupee value even more. Moreover, rising oil prices will also lead to increase in the cost of fuel based commodities like cars, electric appliances, big machines, etc. The RBI has predicted that if fuel costs increased by even 10%, the CPI will inflate by almost 25points.

US Bond Yields: In order to boost its economy, US uses a policy called ‘Quantitative Easing’. Under this policy, the Federal Reserve prints more money to increase cash circulation in the market. This move can boost the economy by giving more power to the public and businesses to purchase goods and products. Thus companies can invest this money in manufacturing activities, and the public can invest it in bonds and debentures. With this, the Federal Reserve also increases interest rates on the bonds, thus giving out higher profits. This is the reason why many Americans (public and business) are now pulling out their investments from emerging markets like India to reinvest them in US bonds. The US treasury notes rate at 3.09% is less than half the rate of Indian bonds. Yet, the former provides safe investments, whereas Indian markets are more volatile and risky. US investments have thus become more attractive across the world leading. Capital Outflows: The effects of the trade deficit and oil prices can be broken if other sections of the economy are earning dollars. For example, when foreign companies invest in local companies, it brings in more dollars. Increasing FDIs and FIIs can help the economy improve India’s balance sheets. However, Indian capital markets have seen a decrease in investments in the last three months. Foreign investments stood at one fifth the value of that in the previous year. The reason for this is the strengthening of US markets and higher bond yields. Increasing cash flows and reducing the imports are the only ways to improve the value of our currency. Otherwise, the normal economic cycle will continue and bear runs will turn into bulls eventually. But who’s to say how much time will that take. RBI Interference: When the RBI buys more foreign exchange (FOREX), the rupee’s value depreciates. This goes in line with the demand/supply point where an increase in the demand for FOREX leads to lower value of the rupee. By December 2017, the RBI had bought $5.6 billion in FOREX, the highest purchase ever. This, of course, led to depreciation of the rupee in 2018. Now the RBI is planning to sell some of its dollars to prevent the rupee from falling more. Of course, this will be a profitable sale, as the RBI will get more rupees in return for the FOREX than it paid when buying them. The Central Government often indulges in such FOREX policy and it seldom leads to volatility in the currency.

Now let us understand the reasons behind the depreciation of the Indian rupee against the dollar currently; 1. Increase in the price of the crude oil: As we all know that India produces just 20% crude oil of her requirement and rest is imported from the other countries like Iraq, Saudi Arabia, Iran and other gulf countries. Crude oil is the biggest contributor in the import bill of India. According to a January report from energy research and consultancy firm Wood Mackenzie;The daily fuel demand of India is expected to more than double to 190,000 barrelsin 2018, up from last year’s 93,000 barrels. As the demand of crude oil is increasing the bill of oil import is also increasing. Data published by the Petroleum Planning and Analysis Cell (PPAC) points that India’s total crude oil import bill in the current financial year (2018-2019) is expected to jump 24% to $109 billion from $88 billion last fiscal year. Economic survey 2018 estimates that if the price of crude oil increases 10 dollar per barrel then the GDP of India decreases up to 0.2-0.3 percent. So increase in the demand of crude oil will be followed by the increasing import bill in the form of payment of more dollars to oil exporting countries. Hence the demand of dollar will increase in the Indian market which will reduce the value of Indian rupee. 2. Beginning of trade war between the USA and China: The US President Donald Trump has initiated the trade war with China and European countries and India and these countries also retaliated in the same way. So due to this war the price of the imported commodities will go up which will further increase the outflow of dollar from the Indian market. As we know that Indian import bill is always greater than its export bill. It means that the trade war will adversely affect the Indian market and India will also experience the outflow of US dollar from its domestic market. 3. Increasing Trade Deficit of India: A situation, in which the import bill of a country exceeds its export bill, is called trade deficit. Indian merchandise trade deficit of $157 billion in 2017-18 was the widest since 2012-13. In the FY 2012-13, the country had reported a merchandise trade deficit of $190 billion. Trade deficit was around was $ 118 billion in the FY 2016.

Its simple mean is; outflow of foreign currency is more from Indian market as compared to inflow of foreign currency. As per the law of demand; if the demand of a commodity increases, its price also follows it. In the same way; when more and more foreign currency i.e. dollar goes out of Indian market, its domestic price increases and the price of Indian rupee decreases. 4. Out flow of Foreign Currency: It is worth to mention that when the foreign investors find other attractive markets in the other parts of the world; they pull out their invested money by selling the equity shares. But they demands the most respected currency or easily accepted money i.e. dollar. So in such situation the demand of dollar increases which further increases its price.

Foreign Portfolio Investors (FPIs) have pulled out nearly Rs. 48,000 crore from Indian capital markets in the first six months of 2018, making it the fastest outflow in a decade. FPIs withdrew a net sum of Rs. 6,430 crore from equities besides Rs. 41,433 crore from the debt markets during January-June period of the year, taking the total outflow to Rs 47,836 crore.

5. Atmosphere of Political Uncertainty: As per many surveys; done by the media houses, the popularity of the current NDA government is decreasing which is creating the atmosphere of the uncertainty among the foreign investors. Major point of uncertainty is that whether the current NDA government will retain the power at centre or not. If the new government comes in the power and changes the FDI and other policies then the money of investors will trap. So the foreign investors are pulling out their money from the Indian market to invest in those markets which can provide them secured return. This is the reason that the demand of dollar is increasing and the price of Indian rupee of falling. Hence on the basis of the combined impact of the above mentioned reasons the exchange rate between the dollar and India rupee is touching its lowest point. In the conclusion it can be hoped that if the RBI and government of India puts combined efforts in this directions then depreciation trend in the Indian currency can be checked.

The Indian rupee has witnessed high volatility this year, falling nearly 14 per cent between April to October, as investors dumped the local currency in wake of global headwinds coupled with widening current account deficit led by higher crude oil prices. Adding to it, strong demand for the US currency from importers and foreign fund outflows also weighed on rupee movement. The Indian currency had hit its all-time intra-day low of 74.45 against the US dollar on 11 October, 2018, making it one of the Asia's worst performers. Still not out of woods The rupee's recent upward spiral signals that worst might be over for Asia's third-largest economy (for now) as softening crude oil prices, sustained selling of the greenback by exporters and banks, and recovery in the Indian equity markets may give impetus to the local currency. Movement in the Rupee against the US dollar since 01 Jan 18. Source: MCXSX What experts say India Ratings,

in a publication, said that the global developments such as strengthening of the US dollar, high commodity prices especially of crude oil, tighter monetary conditions in the US, coupled with domestic factors such as expanding current account deficit, inflationary pressures and likely fiscal slippage are together impacting the rupee. The agency expects rupee to average Rs 69.79/$ in FY19 (1HFY19 average: Rs 68.57/$), a depreciation of 8.3 per cent. This is, however, contingent upon mobilisation of $30 billion from non-resident Indian similar to 2013. Depreciation in rupee against the US dollar so far is at a five-year high. However, a longer term view suggests that average depreciation in rupee versus the dollar during FY15-FY19 will be only 3 per cent, which is at par with 20 years average depreciation (FY09-FY18). ALSO READ:Gold loan NBFCs and jewellers see gold shining in 2019 According to a CRISIL report, on average basis, the decline in rupee is less steep at 7.4 per cent on-year, but still much higher than the trend rate of depreciation, of approximately 2.5 per cent average per year, in the last fifteen years. Factors contributing to rupee fall against dollar Strong demand of US dollar: One of the important factors driving down the domestic currency has been strong demand of the US currency from importers and banks and weak condition of regional Asian currencies against greenback. Rising crude oil import bill: Weakening rupee makes our import costlier. Since India depends on imports for large part of crude oil, a weak rupee shoots up the fuel prices. Fed rate hike: The rupee came under pressure after the US Federal Reserve hiked interest rate as it made US treasuries more attractive and also boosted the dollar. The US Federal Reserve has raised its key interest rate four times this year, a move that made the greenback a more attractive bet than other currencies. Fed rate hike impacts India and other emerging economies, because the US is the world's biggest economy and the world's primary reserve currency is still the dollar. Turkey currency crisis: Turmoil in Turkish currency affected Indian currency during the first half of the year after Turkey's central bank struggled to contain its local currency 'Turkish Lira'. Rupee fell to record low levels after Turkey's widening diplomatic spat with the US spooked investors sentiment. Stock market movement: The rupee has been well supported by Indian equity market this year. The Sensex and Nifty look set to close on a positive note despite witnessing volatile phases of trade during the period. The BSE

Sensex has logged over 5 per cent gains this year and the Nifty has gained nearly 3 per cent during the same period on the back of strong economic fundamentals and falling crude prices. Edited by Chitranjan Kumar

Date

Price 30-Dec-16 29-Dec-16 28-Dec-16 27-Dec-16 26-Dec-16 25-Dec-16 23-Dec-16 22-Dec-16 21-Dec-16 20-Dec-16 19-Dec-16 18-Dec-16 16-Dec-16 15-Dec-16 14-Dec-16 13-Dec-16 12-Dec-16 11-Dec-16 9-Dec-16 8-Dec-16 7-Dec-16 6-Dec-16 5-Dec-16 4-Dec-16 2-Dec-16 1-Dec-16 30-Nov-16 29-Nov-16 28-Nov-16 27-Nov-16 25-Nov-16 24-Nov-16 23-Nov-16 22-Nov-16 21-Nov-16 20-Nov-16 18-Nov-16 17-Nov-16 16-Nov-16 15-Nov-16 14-Nov-16 13-Nov-16 11-Nov-16 10-Nov-16 9-Nov-16 8-Nov-16 7-Nov-16 6-Nov-16 4-Nov-16 3-Nov-16

Change % 67.955 67.936 68.233 67.978 67.76 67.841 67.837 67.848 67.837 67.917 67.844 67.845 67.855 67.857 67.475 67.411 67.431 67.47 67.47 67.546 67.438 67.742 68.025 68.021 68.031 68.236 68.598 68.615 68.579 68.519 68.519 68.761 68.784 68.396 68.228 68.18 68.191 68.023 67.999 67.786 67.785 67.557 67.565 66.865 66.515 66.246 66.745 66.795 66.796 66.668

0.03% -0.44% 0.38% 0.32% -0.12% 0.01% -0.02% 0.02% -0.12% 0.11% 0.00% -0.01% 0.00% 0.57% 0.09% -0.03% -0.06% 0.00% -0.11% 0.16% -0.45% -0.42% 0.01% -0.01% -0.30% -0.53% -0.02% 0.05% 0.09% 0.00% -0.35% -0.03% 0.57% 0.25% 0.07% -0.02% 0.25% 0.04% 0.31% 0.00% 0.34% -0.01% 1.05% 0.53% 0.41% -0.75% -0.08% 0.00% 0.19% -0.14%

2-Nov-16 1-Nov-16 31-Oct-16 30-Oct-16 28-Oct-16 27-Oct-16 26-Oct-16 25-Oct-16 24-Oct-16 23-Oct-16 21-Oct-16 20-Oct-16 19-Oct-16 18-Oct-16 17-Oct-16 16-Oct-16 14-Oct-16 13-Oct-16 12-Oct-16 11-Oct-16 10-Oct-16 9-Oct-16 7-Oct-16 6-Oct-16 5-Oct-16 4-Oct-16 3-Oct-16 2-Oct-16 30-Sep-16 29-Sep-16 28-Sep-16 27-Sep-16 26-Sep-16 25-Sep-16 23-Sep-16 22-Sep-16 21-Sep-16 20-Sep-16 19-Sep-16 18-Sep-16 16-Sep-16 15-Sep-16 14-Sep-16 13-Sep-16 12-Sep-16 11-Sep-16 9-Sep-16 8-Sep-16 7-Sep-16 6-Sep-16 5-Sep-16 4-Sep-16 2-Sep-16 1-Sep-16

66.762 66.696 66.686 66.791 66.778 66.881 66.863 66.806 66.845 66.921 66.926 66.83 66.645 66.733 66.789 66.715 66.717 66.794 66.812 66.834 66.492 66.601 66.602 66.697 66.572 66.609 66.546 66.557 66.556 66.812 66.349 66.425 66.613 66.706 66.707 66.633 66.744 66.985 66.98 67.075 67.075 66.86 66.798 67.14 66.738 66.785 66.895 66.631 66.478 66.28 66.47 66.583 66.795 66.801

0.10% 0.01% -0.16% 0.02% -0.15% 0.03% 0.09% -0.06% -0.11% -0.01% 0.14% 0.28% -0.13% -0.08% 0.11% 0.00% -0.12% -0.03% -0.03% 0.51% -0.16% 0.00% -0.14% 0.19% -0.06% 0.09% -0.02% 0.00% -0.38% 0.70% -0.11% -0.28% -0.14% 0.00% 0.11% -0.17% -0.36% 0.01% -0.14% 0.00% 0.32% 0.09% -0.51% 0.60% -0.07% -0.16% 0.40% 0.23% 0.30% -0.29% -0.17% -0.32% -0.01% -0.26%

31-Aug-16 30-Aug-16 29-Aug-16 28-Aug-16 26-Aug-16 25-Aug-16 24-Aug-16 23-Aug-16 22-Aug-16 21-Aug-16 19-Aug-16 18-Aug-16 17-Aug-16 16-Aug-16 15-Aug-16 14-Aug-16 12-Aug-16 11-Aug-16 10-Aug-16 9-Aug-16 8-Aug-16 7-Aug-16 5-Aug-16 4-Aug-16 3-Aug-16 2-Aug-16 1-Aug-16 31-Jul-16 29-Jul-16 28-Jul-16 27-Jul-16 26-Jul-16 25-Jul-16 24-Jul-16 22-Jul-16 21-Jul-16 20-Jul-16 19-Jul-16 18-Jul-16 17-Jul-16 15-Jul-16 14-Jul-16 13-Jul-16 12-Jul-16 11-Jul-16 10-Jul-16 8-Jul-16 7-Jul-16 6-Jul-16 5-Jul-16 4-Jul-16 3-Jul-16 1-Jul-16 30-Jun-16

66.973 67.144 67.113 67.136 67.136 67.016 67.167 67.122 67.202 67.137 67.137 66.83 66.893 66.87 66.853 66.91 66.908 66.75 66.765 66.774 66.81 66.842 66.842 66.84 66.767 66.682 66.764 66.656 66.655 67.014 67.072 67.321 67.412 67.154 67.154 67.153 67.163 67.204 67.137 67.141 67.141 66.843 67.016 66.975 67.138 67.14 67.139 67.495 67.411 67.434 67.265 67.189 67.19 67.504

-0.25% 0.05% -0.04% 0.00% 0.18% -0.22% 0.07% -0.12% 0.10% 0.00% 0.46% -0.09% 0.03% 0.03% -0.08% 0.00% 0.24% -0.02% -0.01% -0.05% -0.05% 0.00% 0.00% 0.11% 0.13% -0.12% 0.16% 0.00% -0.54% -0.09% -0.37% -0.13% 0.38% 0.00% 0.00% -0.01% -0.06% 0.10% -0.01% 0.00% 0.45% -0.26% 0.06% -0.24% 0.00% 0.00% -0.53% 0.12% -0.03% 0.25% 0.11% 0.00% -0.47% 0.12%

29-Jun-16 28-Jun-16 27-Jun-16 26-Jun-16 24-Jun-16 23-Jun-16 22-Jun-16 21-Jun-16 20-Jun-16 19-Jun-16 17-Jun-16 16-Jun-16 15-Jun-16 14-Jun-16 13-Jun-16 12-Jun-16 10-Jun-16 9-Jun-16 8-Jun-16 7-Jun-16 6-Jun-16 5-Jun-16 3-Jun-16 2-Jun-16 1-Jun-16 31-May-16 30-May-16 29-May-16 27-May-16 26-May-16 25-May-16 24-May-16 23-May-16 22-May-16 20-May-16 19-May-16 18-May-16 17-May-16 16-May-16 15-May-16 13-May-16 12-May-16 11-May-16 10-May-16 9-May-16 8-May-16 6-May-16 5-May-16 4-May-16 3-May-16 2-May-16 1-May-16 29-Apr-16 28-Apr-16

67.422 67.715 67.914 67.884 67.885 67.279 67.449 67.624 67.551 67.074 67.074 67.315 67.079 67.292 67.187 66.952 66.952 66.753 66.5 66.658 66.79 66.999 67 67.268 67.434 67.209 67.171 67.032 67.031 66.927 67.273 67.63 67.409 67.43 67.408 67.436 67.14 66.825 66.844 66.925 66.855 66.757 66.561 66.631 66.752 66.602 66.6 66.558 66.627 66.558 66.346 66.425 66.425 66.401

-0.43% -0.29% 0.04% 0.00% 0.90% -0.25% -0.26% 0.11% 0.71% 0.00% -0.36% 0.35% -0.32% 0.16% 0.35% 0.00% 0.30% 0.38% -0.24% -0.20% -0.31% 0.00% -0.40% -0.25% 0.33% 0.06% 0.21% 0.00% 0.16% -0.51% -0.53% 0.33% -0.03% 0.03% -0.04% 0.44% 0.47% -0.03% -0.12% 0.10% 0.15% 0.29% -0.11% -0.18% 0.23% 0.00% 0.06% -0.10% 0.10% 0.32% -0.12% 0.00% 0.04% 0.06%

27-Apr-16 26-Apr-16 25-Apr-16 24-Apr-16 22-Apr-16 21-Apr-16 20-Apr-16 19-Apr-16 18-Apr-16 15-Apr-16 14-Apr-16 13-Apr-16 12-Apr-16 11-Apr-16 8-Apr-16 7-Apr-16 6-Apr-16 5-Apr-16 4-Apr-16 1-Apr-16 31-Mar-16 30-Mar-16 29-Mar-16 28-Mar-16 25-Mar-16 24-Mar-16 23-Mar-16 22-Mar-16 21-Mar-16 18-Mar-16 17-Mar-16 16-Mar-16 15-Mar-16 14-Mar-16 11-Mar-16 10-Mar-16 9-Mar-16 8-Mar-16 7-Mar-16 4-Mar-16 3-Mar-16 2-Mar-16 1-Mar-16 29-Feb-16 26-Feb-16 25-Feb-16 24-Feb-16 23-Feb-16 22-Feb-16 19-Feb-16 18-Feb-16 17-Feb-16 16-Feb-16 15-Feb-16

66.362 66.404 66.685 66.66 66.66 66.489 66.166 66.15 66.416 66.66 66.597 66.496 66.283 66.287 66.551 66.757 66.517 66.422 66.106 66.365 66.255 66.375 66.375 66.608 66.829 66.916 66.93 66.755 66.5 66.384 66.619 67.173 67.372 67.138 66.921 67.302 67.128 67.313 66.989 66.938 67.122 67.395 67.753 68.208 68.737 68.768 68.431 68.561 68.533 68.545 68.542 68.329 68.474 68.131

-0.06% -0.42% 0.04% 0.00% 0.26% 0.49% 0.02% -0.40% -0.37% 0.09% 0.15% 0.32% -0.01% -0.40% -0.31% 0.36% 0.14% 0.48% -0.39% 0.17% -0.18% 0.00% -0.35% -0.33% -0.13% -0.02% 0.26% 0.38% 0.17% -0.35% -0.82% -0.30% 0.35% 0.32% -0.57% 0.26% -0.27% 0.48% 0.08% -0.27% -0.41% -0.53% -0.67% -0.77% -0.05% 0.49% -0.19% 0.04% -0.02% 0.00% 0.31% -0.21% 0.50% 0.02%

12-Feb-16 11-Feb-16 10-Feb-16 9-Feb-16 8-Feb-16 5-Feb-16 4-Feb-16 3-Feb-16 2-Feb-16 1-Feb-16 29-Jan-16 28-Jan-16 27-Jan-16 26-Jan-16 25-Jan-16 22-Jan-16 21-Jan-16 20-Jan-16 19-Jan-16 18-Jan-16 15-Jan-16 14-Jan-16 13-Jan-16 12-Jan-16 11-Jan-16 8-Jan-16 7-Jan-16 6-Jan-16 5-Jan-16 4-Jan-16 1-Jan-16

68.118 68.471 67.861 67.901 68.034 67.81 67.544 67.934 67.975 67.835 67.878 68.053 68.144 67.739 67.755 67.549 67.799 67.958 67.734 67.661 67.775 67.316 66.917 66.946 66.76 66.847 66.891 66.698 66.481 66.579 66.235

-0.52% 0.90% -0.06% -0.20% 0.33% 0.39% -0.57% -0.06% 0.21% -0.06% -0.26% -0.13% 0.60% -0.02% 0.30% -0.37% -0.23% 0.33% 0.11% -0.17% 0.68% 0.60% -0.04% 0.28% -0.13% -0.07% 0.29% 0.33% -0.15% 0.52% 0.04%

69 68.5 68 67.5 67 66.5 66 65.5 65 64.5

Series1