Forecasting Exchange Rates

Arindam Banerjee FCMA CFP

Need for Exchange Rate Forecast

Forecast Irrelevance Approach Market Efficiency Hypothesis

Forecast Relevance Approach

Hedging decisions Investment of short term funds Long-term investment of funds Financing decisions Assessment of earnings

Problems in Exchange rate Forecast

Assumption that past economic data would be guide for future Forecast normally concerns nominal exchange rate

Techniques of Forecasting
Technical Forecasting Fundamental Forecasting Market based Forecasting Mixed Forecasting

Technical Forecasting
Classical charting techniques line chart, candlestick chart etc. Statistical Techniques simple and weighted moving averages etc. Mathematical techniques -