M5A1: Case Analysis: Forecasting Exchange Rates

Read the Forecasting Exchange Rates, Blades, Inc. Case Study on page 307 of the textbook and respond to the following questions about the case:

  • Taking into consideration how Blades currently operates and how it plans to operate in the future, explain what forecasting technique you would recommend to determine the future value of the baht, and explain how Blades would benefit from this forecast. Explain your answer by demonstrating the pros and cons of each forecast methodology (technical, fundamental and market-based).
  • Make a determination of the value change in the baht during the next quarter using each method. Also find the forecasted value of the baht using the expected value. If in reality the value of the baht 90 days from now is $0.22, what does that tell you about the accuracy of each forecasting techniques?
  • Explain whether or not the technique you find to be the most accurate in this case will always be the most accurate one.

Provide additional insights beyond the textbook by researching topics through other resources, such as the Wall Street Journal, business magazines, and so on, and demonstrate how your research supports your responses.

Your analysis should be created as a MS Word document, 3-5 pages in length (excluding cover page and reference listing), written and formatted in APA style, in Times New Roman, 12-point font, with one inch margins.