The purpose of this paper is to eye on the exchange rate of a particular currency (not the U.S. dollar) and perform a financial and economic study of the currency using the methods and models discussed in class. The paper is expected to address, but not limited to, the main points listed below. The term paper requires a minimum of 4 pages (excluding charts and graphs) and is worth of 100 points. The due date is by 11:59 pm (ET), Sunday, April 24.

Your paper should cover the following:

1. Pick a particular country and its currency, cannot be the U.S. dollar. Explain the rationale of your choice.
2. Introduce this countrys banking and financial system, for example, its central bank, the head and/or board members of the central bank, the major commercial banks and financial intermediaries, its financial markets, and its recent monetary policy, etc.
3. Collect and demonstrate the daily exchange rates of this currency with other two currencies (one currency must be the U.S. dollar and you are free to choose the other one) from January 1^st to April 1^st.
4. Calculate the percentage changes of two exchange rates January 1^st to April 1^st. (Note: the percentage change = (ER at April 1-ER at January 1)/ER at January 1 x100)
5. Explain the major political, financial, and economic events and/or reasons that cause the exchange rate fluctuations in the three months.
6. Collect (or calculate) the inflation rates in the home country and two foreign countries between January 1^st and April 1^st.
7. Check if the Purchasing Power Parity Theory holds on these two exchange rates, by using the formula on Page 259. (Note: to check if PPP holds, you need to compare the value of that is calculated by using the formula on Page 259 to the percentage change of exchange rate on Step 4 above. If these two numbers are fairly close, then PPP holds. Otherwise, no.)
8. Forecast the exchange rate changes for the near future and provide reasons and supports.
9. Identify and explain the potential opportunities and risks for the picked currency in the future.

My expectation is that you will use information and methods covered in the course, but that you will also bring in material you discover on your own. Your analysis must be supported by graphical and/or mathematical depictions/descriptions of this countrys currency and its exchange rates with other two currencies, important international finance features (exchange rate quotations, exchange rate risks, and purchasing power parity, etc.), and exchange rate forecasting. I would like to see some real-world numbers pertaining to your analysis. You don't need to do statistical analysis, but you should demonstrate quantitative knowledge of the magnitude and scope of the analysis.