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Subject Code: BAFI3182 Subject Name: Financial Markets Location & Campus RMIT Vietnam , SGS TRAN QUYNH NHU – s3715434 Student name: TRUONG QUYNH NHU - s3694814 AN THANH HANG - s3634827 Teachers Name: Mr M Truong Assignment – FX Market Analysis and Trading Strategies Table of Contents EXECUTIVE SUMMARY I INTRODUCTION II ANALYSIS AND TRADING STRATEGIES FX MARKET PAST BEHAVIOR ANALYSIS FX MARKET ELEMENT ANALYSIS 2.1 INFLATION RATE 2.2 INTEREST RATE 2.3 ECONOMIC GROWTH 2.4 INTERNATIONAL SPECULATION 2.5 FX EXPECTATION 2.6 COMMODITY PRICE (GOLD/OIL) 2.7 OFFICIAL INTERVENTION 2.8 SUMMARY 6 11 14 15 16 17 17 III 17 IV TRADING STRATEGY TRADING STRATEGY FOR USD/CNY BID/OFFER TRADING STRATEGY FOR USD/VND CONCLUSION V APPENDIX VI REFERENCES 18 21 22 23 23 assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies Executive Summary This report is aimed at deriving appropriate strategies to benefit from currency fluctuations in the foreign exchange market for the Vietnamese Bank Vietcombank-Joint Stock Commercial Bank for Foreign Trade This report will consist of two main parts: (1) an analysis of foreign exchange market behaviors and related elements; (2) recommended trading strategies In order to deliver the best advice, this report will take into consideration many elements that can directly affect the currencies such as past FX market behaviors, economic elements indirectly influencing the currency of all three nations USA, China and Vietnam i.e economic growth, relative inflation rate, relative interest rate, international speculation, foreign exchange market speculation, commodity prices and official intervention Despite careful analysis, there is currently high volatility in the foreign exchange market as of now due to the brewing trade tensions between China and the US Thus, we will offer risk management strategies in the case of unpredictable market changes due to any changes in world events With an expectation that within the next months, the USD will depreciate against the CNY and VND, our strategy is to sell off USD at the moment to buy CNY and VND and later on after months we will try to buy back the USD to square our position Should the market follows our expectation, the planned profit will be CNY 3,771,700 and VND 802,000,000 To manage unexpectable risk, we also recommend trade in small quantity and follow closely to the exchange rate, to have any needed action should the market go against our plan assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies I Introduction Vietcombank-Joint Stock Commercial Bank for Foreign trade of Vietnam is one of the biggest bank in the Vietnamese market capitalization with an estimated evaluation of 85,014 billion VND (US$3.98 billion) as stated in Ho Chi Minh City Stock Exchange (CafeF.vn, 2018) JSC Bank for Foreign Trade of Vietnam, once known as Bank for Foreign exchange of Vietnam, was established on April 1st, 1963 from the Foreign Exchange Bureau (of the State Bank of Vietnam), becoming the first commercial bank decided for pilot privatization by the Government After over 50 long periods of development and advancement, Vietcombank has contributed essentially to the strength and development of national economy, maintaining the part of a considerable foreign exchange bank in encouraging productive domestic economy and additionally impacting significantly on local and worldwide money related network Specifically in this report, our team working for Vietcombank sets the main objective is to develop an strategy of trading in the foreign exchange market We chose two pairs of currencies which are USD/CNY and USD/VND since there have been a number of remarkable economic events recently affecting the market We predict that USD will depreciate against and CNY The report will include analysis of past performance of both currencies and the trading strategy for 2019 assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies II Analysis and trading strategies FX Market Past Behavior Analysis 1.1 USD/CNY Figure 1: USD/CNY exchange rate 2015-2018 (reproduced from Thomson Reuters Eikon) It can be clearly seen that the relationship between USD and CNY was extremely unstable from 2015 to half of 2018 With China’s effort to modify the traditional fixed exchange rate, China-USD exchange rate was gradually increasing its value from quarter 2, 2015 then reaching a peak at 6.9330 in December when China became the US’s biggest trading partner with the trading valuation was valued at $441.6-billion (U.S.) to the end of September which accounted for 15.7% of total U.S trade quantity, according to the U.S Commerce Department (IAN, 2016) However in 2017, The U.S trade deficit with China set a record since Canada became the US no.1 foreign oil supplier with price lower than the average climb at that time which lead to a dramatically fall in exchange rate until the second quarter of 2018 (Ken, 2018) assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies Figure 2: USD/CNY forecast exchange rate 2015-2018 (reproduced from Thomson Reuters Eikon) The exchange situation has been increasing remarkably to the historical peak when the US president Donald Trump announced to set up policy to put tariff on Chinese goods trade to the US (Sophie, 2018) However since July when the tariff will be applied directly, the trading activities are predicted to decrease (purple line in the figure 2) As a result the exchange rate between USD and CNY is forecast to drop Additionally, China Yuan has been weaken due to the government’s strategy and soon rising up, USD might depreciate against CNY in the next period of time (Chaeng, 2018) 1.2 USD/VND Figure 3: USD/VND exchange rate 2015-2017 (reproduced from Thomson Reuters Eikon) Contrast to CNY, the exchange rate of VND and USD has been increasing constantly since 2015 Even though there were some fluctuate in 2016, the USD raised its value by 22,800 in 2017 as a result when Vietnam has considered the United States as its top single-country assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies long in Chinese Yuan, especially after the first two quarters of 2018 Then we would adjust our bid and offer suitably based on what we get from the sellers response Preferably, should the demand for USD is high, we can increase our bid/offer close to the market price rate to minimize cost and maximize profit On the other hand, if the opposite happens, we can slowly decrease our bids down to another pips to encourage people to sell CNY for USD, but that should be the limit and the bank should not go any lower than that If the USD attracts higher demand, we would raise our bid/offer closer to the market price real figure to reduce the cost and optimize our profit In the case that the demand for US dollar is low, we would gradually decrease our bids down by pips with a view to encouraging investors to sell CNY for USD After that, until the end of the first three months, our main aim is to sell off the CNY we have acquired initially, slowly and steadily so as not to exposing ourselves to major risks Up until this time, we would move our quotes back to the right; to encourage people to sell the USD and buy CNY, it is needed that we increase both the bid and offer quotes for USD/CNY, this would attract the attention of Chinese Investor in Vietnam to sell USD for CNY, because we are bidding them a more attractive price for the USD than the market average After the first quarter, we would sell off the CNY profit we gained with a steady degree in order not to face with unexpected risks We would move back our quotes to the right: raising both the bid and offer quotes for USD/CNY, which drives people to sell USD and buy CNY, as we bid them an attractive USD price compared to the market If the market behaves in the way that we have expected, after months, we would earn a total profit of CNY 3,771,700 The proposed interest below is extracted from Thomson Reuters Eikon We expect to generate a total profit of CNY … after conducting our above plan The detail of the execution of our plan will be illustrated in details in the tables below: assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies Month USD in million Position Sell -7 Down Buy -2 Down Buy Square Table 1: Trading Position for VCB from September to November – 2018 Month USD CNY Rate USD/CNY (7,000,000) 48,424,600 6.9178 5,000,000 (32,100,000) 6.8200 2,000,000 (12,620,400) 6.8102 3,704,200 Table 2: Profit and Loss Statement from FX Trading activities from September to November – 2018 For the next months, we expect that the depreciation rate of CNY against USD would slow down substantially, to minimize the risk, in this period using the same strategy as above, we would only look forward to sell USD million initially, and the details are illustrated as the table below Month USD in million Position Sell -3 Down Buy -1 Down Buy Square Table 3: Trading Position for VCB from December 2018 to February 2019 Month USD CNY Rate USD/CNY (3,000,000) 20,351,100 6.7837 2,000,000 (13,533,600) 6.7668 1,000,000 (6,750,000) 6.7500 67,500 Table 4: Profit and Loss Statement from FX Trading activities from December 2018 to February 2019 Risk Management Plan: assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies We are well aware of the volatility of the FX market and how unstable the exchange rates are, especially the USD/CNY pair due to the current unstable economics condition from the trade war between two countries Our recommendation to cope is to square the position immediately, should the following conditions apply: The USD/CNY rates decreases considerably faster than our expectation and after reaching a bottom (the lowest we suspected is 6.8102 for the first three months and 6.75 for the latter) and starts to increase again (our benchmark is 50 pips from the bottom benchmark) We should close the deal immediately and square our position to secure the benefit The USD/CNY rates increases due to unfavorable conditions such as new tariffs imposed on China, or other macroeconomics factors, which surpass our 200 pips of loss anticipated; we should sell of our CNY for USD to minimize potential losses From the beginning of September, we expect that the USD/CNY rates would still increases slightly due to the lag effect of the new tariff imposed by President Trump on China For the first half of September, we would recommend divided the initial USD million and sell it in smaller amount every two days, keeping a close eye on the interest rate; as soon as the USD/CNY rates starts decreasing we would sell of the entire remaining USD for CNY Moreover, as the exchange rates fluctuate constantly, while dealing with the sellers or the buyers, VCB needs to be well aware of the changes in the exchange rate before the deal can be closed; for the most favorable rate for our company, we are required to keep a close look on changes in exchange rate in a timely matters as well as closing our deal as soon as possible to prevent unwanted outcomes To minimize this risk, we suggest that VCB should transaction with domestics firms and corporations in order to close the deal as fast as possible Another risk management plan we would like to propose is to utilize many other currencies such as Euro, AUD, or VND, etc to acquire the initial needed figure for CNY and at the end to buy back USD In this way, the impact of a sudden depreciation of CNY or an appreciation of USD would be softened Because investing a great deal of money in just one currency pair is extremely dangerous and sharing that risk for many other pair of currency would be a much assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies safer option, therefore we would not at a high risk of losing a lot of money Moreover this plan would minimize the liquidity risk; we would not be at stake of not having enough USD for operation Trading Strategy for USD/VND According to our research and the speculation extracted from Thomson Reuters Eikon, the USD would only slightly depreciate against VND Moreover, due to the high instability of the Vietnamese Currency, we not recommend going long for VND and go short for USD for any longer than the end of 2018 For the last quarter of 2018, to increase the demand for USD and attract people to sell VND, we move our quotes to the left, by decreasing both the bid and offer quotes we would again encourage people to buy USD and sell VND And latter on moving toward the end of the 2018, we would move the quotes to the right, we are now bidding higher than the market price to promote people to sell VND, giving us the opportunity to buy back the USD and square our position Using the same model that applies for the trading strategy of USD/CNY, but as we suspect that the gain from the USD/VND pair (at 90 pips) is much lower in comparison to USD/CNY (over 1000 pips), we only suggest beginning the trading with selling USD million For the first two month of 2019, to secure our profit, our recommendation is that we would only earn profit based on the spread of the bid and offer, and squaring our position daily as the exchange rate for USD/VND tends to fluctuates greatly and the VND can depreciate at any time Should the exchange pattern follow our expectation, after the first three months, an addition profit of VND 802 million can be earned Month USD in million Position Sell -4 Down Buy -1 Down Buy Square Table 5: Trading Position for VCB from September to November – 2018 assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies Month USD VND Rate USD/VND (4,000,000) 92,788,000,000 23,197 3,000,000 (68,997,000,000) 22,999 1,000,000 (22,989,000,000) 22,989 802,000,000 Table 6: Profit and Loss Statement from FX Trading activities from September to November – 2018 Risk Management Plan: Our maximum profit we anticipated from this trading deal is around 90 pips, should the rates decreases in our favor and reaches this level, we would square of immediately As the VND is relatively unstable and is expected to depreciate against USD at any moment, if the USD/VND increases by 40 pips, we would recommend squaring off the position instantly to prevent further losses IV Conclusion After our research conducted on the past performance of USD/CNY and USD/VND as well as analyzing other macroeconomics factors such as inflation rate, interest rate, growth rate, interventions, commodity prices, we have finally come to our conclusion that during the next months, the USD would depreciated against both the CNY and VND; however we are more confident about the appreciation of the CNY so we suggest to go long for CNY for the period and square our position at the end to maximize profit If the FX market behaves according to our expectation, after months we would earn a total profit of CNY 3,771,700 and VND 802,000,000 Still, there is much volatility in the FX trading market and VCB has to keep a close observation on the fluctuating exchange rate and react immediately to prevent unwanted outcome V Appendix Speculated Exchange Rate for USD/CNY and USD/VND (Retrieved from Thomson Reuters assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies Eikon) VI References Baffes J., (May 2018) Why commodity prices are rising in nine charts World Bank Forum Retrieved from http://blogs.worldbank.org/developmenttalk/why-commodity-prices-arerising-nine-charts Glenn E (July 2018) Economists raise China’s 2018 GDP growth forecast despite trade uncertainty [online] Retrieved from https://www.reuters.com/article/us-china-economypoll/economists-raise-chinas-2018-gdp-growth-forecast-despite-trade-uncertaintyidUSKBN1K20Z7 International Monetary Fund (2018) Less Even Expansion, Rising Trade Tensions World Economic Outlook [online] Available at: https://www.imf.org/en/Publications/WEO/Issues/2018/07/02/world-economic-outlookupdate-july-2018 [Accessed 13 Aug 2018] Julia Kollewe (16 August 2018) China to send delegation for US talks to avert trade war Reuters Retrieved from https://www.theguardian.com/business/2018/aug/16/china-tosend-delegation-for-us-talks-to-avert-trade-war [Accessed 13 Aug 2018] J Tankersley and N.Irwin (July 2018) Federal Reserve raise interest rates The New York Times Retrieved from https://www.nytimes.com/2018/06/13/us/politics/federal-reserveraises-interest-rates.html OECD (2018) Economic Outlook Report May 2018 [online] Retrieved from http://www.oecd.org/eco/outlook/economic-outlook/[ Accessed 13 Aug 2018] Shinichi Saoshiro (17 August 2018) Dollar subdued as confidence returns focus on US-China trade talks Reuters [online] Retrieved from https://uk.reuters.com/article/us-globalforex/dollar-subdued-as-confidence-returns-focus-on-u-s-china-trade-talks-idUKKBN1L203G [Accessed 13 Aug 2018] assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies Reuters (1 August 2018) Vietnam PM says to limit Dong devaluation at pct this year [online] Retrieved from https://www.reuters.com/article/vietnam-forex/vietnam-pm-saysto-limit-dong-devaluation-at-2-pct-this-year-idUSL4N1US539[Accessed 13 Aug 2018] Hardach, S (2018) Here's what you need to know about the US-China trade dispute [online] weforum.org Available at: https://www.weforum.org/agenda/2018/04/here-are-5facts-you-need-to-know-about-the-us-china-trade-dispute/ [Accessed 17 Aug 2018] MARLOW, I (2018) China passes Canada to become largest U.S trading partner [online] theglobeandmail.com Available at: https://www.theglobeandmail.com/report-onbusiness/international-business/asian-pacific-business/china-passes-canada-as-uss-largesttrading-partner/article27134249/ [Accessed 17 Aug 2018] Ming, C (2018) The dollar keeps rising against China's yuan That's set to continue [online] cnbc.com Available at: https://www.cnbc.com/2018/06/21/yuan-set-to-weaken-moreamid-us-china-trade-tensions-policy-divergence.html [Accessed 17 Aug 2018] s.cafef.vn (2015) Ngân hàng Thương mại cổ phâần Ngoại thương Việt Nam (HOSE) [online] Available at: http://s.cafef.vn/VCB-157505/von-hoa-122-nghin-ty-dong-vcb-tro-thanh-maanh-huong-lon-nhat-toi-vnindex.chn [Accessed 17 Aug 2018] Roberts, K (2018) Top 10 U.S Trade Partners In 2017 Can Be Broken Into Tiers [online] forbes.com Available at: https://www.forbes.com/sites/kenroberts/2018/02/28/top-10-u-strade-partners-in-2017-can-be-broken-into-three-tiers/#4075bb91627e [Accessed 17 Aug 2018] everycrsreport.com (2018) U.S-Vietnam Economic and Trade Relations: Key Issues in 2018 [online] Available at: https://www.everycrsreport.com/reports/R45172.html [Accessed 17 Aug 2018] Nhan Dan Online 2018, “Vietnam faces challenges in curbing inflation at 4% in 2018”, assignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategiesassignment.2.fx.market.analysis.and.trading.strategies 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