Currency Portfolio

Ahmed Osman Rana Darwish Lulwah Ayyoub Lina Nabarawy Diana Takawy

 Our first trade took place on October 1stand the last one on November 30th For our exchange rates and historical trends, we used data from Yahoo Finance.

U.S Dollar (USD)

Candaian Dollar (CAD)

Euro (EUR)

British Pound (GBP)

Australian Dollar (AUD)

New Zealand Dollar (NZD)

Singapore Dollar (SGD)

Swiss Franc (CHF)

Turkish Lira (TRY)

Japanese Yen (JPY)

 USD, CAD, EUR, GBP, AUD, CHF and JPY are the most tradable currencies on the foreign exchange market. As for NZD, SGD and TRY we anticipated NZD/USD, SGD/USD and TRY/USD

Oct 1st: Initial Investment

Currency USD CAD EUR GBP AUD NZD CHF JPY Percent of Total
10 10 5 5 10 10 5 25 10 10

SGD
TRY

Oct 15th: Second Week

Our portfolio amounted to 51,270, 479.29. We then made the following changes.
Currency USD Change
We will decrease the amount in USD to $250,000 and convert $4,750,000 to AUD and NZD
Will be increased partially from EUR

CAD
EUR GBP AUD NZD CHF JPY SGD TRY

Will all be converted to CAD and SGD

Will be left the same Will be increased by USD and TRY Will be increased by USD and TRY Will be left unchanged Will be left unchanged, even though change was negative, we anticipate that JPY/USD will grow more in the future Will be increased by EUR and TRY Will be decreased to 1,500,000 TRY and the rest will be converted to SGD, NZD and AUD

 The currencies with the highest positive percentage change are: AUD, NZD, CAD, EUR, and SGD We favoured currencies with a high positive percentage change compared to the previous trading. To stay on the safe side, we have decided to sell all EUR, as the Euro's volatility might move against our position.

Oct 31st : Third Week

Our portfolio amounted to $51,710,167.90
Changes that will be made to the portfolio are as follows: USD CAD EUR GBP AUD
No change

No change will remain the same No change will remain the same will be decreased by NZD 8,000,000, since it will be used to increase TRY will be increased by CHF 2,101,200 from SGD No change, as we speculate value will increase will be decreased by SGD 3,000,000, since it will be used to increase CHF will be increased by TRY 11,454,400 from NZD

NZD
CHF JPY SGD TRY

 The japenese yen went sharply down on october 31 due the intervention of the japense central bank to devalue the currency which resulted in the decline of yen by 5% We increased the amount of TRY by 11,454,400 because it gave a high percentage change against last trade. The trend has been going up since the beginning of our trading.

Nov 15th: Fourth Week

Our portfolio amounted to $50,612,205.6507
Changes that will be made to the portfolio are as follows: USD CAD EUR GBP AUD NZD CHF JPY SGD TRY
Will be increased by AUD and CHF Although its depreciating against USD it is speculated to rise in value again so no exchange will take place No change

No change
Convert all to USD No change, its expected to rise Convert all to USD No change, even though its a positive change up its due to the fact that it went down on OCT 31 No change No change

 We closed our positions for AUD and CHF as we expect them to drop even further. USD strengthened during this day as a result of the announcement made by the US commerce department announcing an increase in the retail sales and auto sales better than what was expected by the market. CHF trend went really down this day as people speculated the possibility that the Swiss central bank would intervene at any time to stop the CHF from rising. Thats why the CHF gave -4% percentage change against last trade so we decided to close our position and convert them back to USD. JPY was the only currency that went up on this day as some investors turned to Japanese yen as a safe haven but it didnt go up this much as investors were afraid of another intervention from the central bank.

Nov 30th : Fifth Week

Our portfolio amounted to $50,480,686.6169 We converted all currencies back to dollars

We should not have sold the AUD and CHF as they made a slight upward change. Currencies we should have sold are TRY and GBP as they fell lower. TRY trend started going down after November 23 rd Fitch the credit rating agency downgraded Turkey to BB+. According to Fitch turkey had to treat its trade deficit and inflation rate. And this led to the depreciation of the currency, because more investors became reluctant to buy Turkish Lira. Turkey after this downgrading is considered investment junk.

Lessons learnt from trading:

Currencies trends are usually affected by the political conditions that prevail in the country so watching news is necessary to understand how currencies and market are going to react. Foreign Exchange market moves and reacts quickly, thus one needs to always be aware of fluctuations. There is what is called discount news which means that markets react even before something happens like when people expect the central bank will devalue certain currency they start acting even before anything happens. The central bank can interfere in the foreign exchange market to devalue the currency when the country is experiencing certain problems, for example: Japan. Countries tend to keep their currencies weak to remain competitive in the market. Also we could have used another way of trading as not to trade all currencies on a single date. We should have observed the trends and buy and sell each currency on its own. We noticed that risk is predetermined, but profits are unpredictable.

 Two currencies that would have been good investments are NOK (Norwegian Korone) and CZK (Czech Koruna). NOK and CZK were down in Oct, and went up in November, resulting in huge profits.

In Conclusion
We started off with a portfolio of $50,000,000 and ended up with $50,480,686.6169. This resulted in a total net profit of $480,686.6169. However, we did reach higher profits on October 31st, when our portfolio was a total sum of $51,710,167.90. Converting our currencies to dollars then would have given us a much higher portfolio, however, we anticipated then that currencies would continue to rise against the USD. The opposite happened, as can be seen in our portfolio, when most currencies dropped during November.