B) Data questions: Floating vs Fixed Exchange Rates

To answer the next questions, you will need to download data on exchange rates and make plots.

ONLY SUBMIT THE PICTURES, i.e. do not submit the data. Make your graphs legible.I suggest Excel to make the plots. There are many sources of exchange rate data, including the databases in the Library:

https://research.stlouisfed.org/fred2/ http://data.imf.org/?sk=5DABAFF2-C5AD-4D27-A175-1253419C02D1 http://www.x-rates.com/

http://www.google.com/finance

Download the data from wherever you think is most convenient.

Question B.1:

Downloadmonthlybilateral exchange rates against the U.S. dollar (USD) for the following currencies for the period from January 2001 to December 2010:

- Argentine Peso (ARS)

- Brazilian Real (BRL)

-Israeli New Shekel (ISL)

-Singapore Dollar (SGD)

- Russia Rouble (RUB)

1. )Make 5 time series plots, i.e., one for each country where on the horizontal axis you have the monthly dates and on the vertical axis the value of the exchange rate. Pay attention to the scale that you choose for the vertical axis, it may influence your answer to question 1.2
2. 2)Using your previous plots, if you had to divide the countries in two groups: those with floating exchange rates and those with fixed exchange rates, which countries would you claim as having floating exchange rates?
3. 3)The previous question was tricky, it is very hard to discover with a simple plot when governments intervene to control their currency. Read the IMF's latest classification of countries with floating exchange rates here:http://www.imf.org/external/np/mfd/er/2008/ eng/0408.htm.

Compare the IMF's classification with your answers to question 1.2, did you agree with the IMF?

Question B. 2

Download monthly bilateral exchange rates against the U.S. dollar (USD) and against the Euro (EUR) for the following currencies, for the period from January 2001 to December 2010. If you can only find the exchange rate against USD, you should use the exchange rate USD/EUR within the same period to compute the exchange rate against Euro:

- Latvian Lats (LVL)

- Hong Kong Dollar (HKD) - Qatari Rial (QAR)

- Danish Krone (DKK)

1) For each currency plot the bilateral exchange rate against the U.S. dollar (USD) and against the Euro (EUR). If you can make them in the same plot (but with different scales) then you will have to do only four graphs. If not then you will need eight graphs.

2) Which countries have a floating exchange rate? What do you observe when you compare the two graphs for each country?

Question B. 3

Downloadmonthly Nominal Effective Exchange Ratedata for the following currencies for the period from January 2007 to December 2010:

- British Pound (GBP)

- Iceland Krona (ISK)

Download monthlyNominal Effective Exchange Ratedata for the following currency for the period from January 1995 to December 1998:

- Thai Baht (THB) If you fail to find the data, go tohttp://www.bis.org/statistics/eer/index.htmto download.

1) Compute the monthly percentage change in the Nominal Effective Exchange Rate for

these three currencies (i.e., the percentage change from one month to the other).

2) Plot the percentage change for each country's NEER. (You can plot the NEERs for British pound and Iceland Krona in a single graph) Remark that the units are now % changes for the three countries. What do they have in common?