Forecasting exchange rates

Running Head: Business and Marketing Forecasting exchange rates [Student’s name] [Institutional affiliation]  Forecasting exchange rates There are a variety of approaches which I would apply towards exchange rates focusing. These include technical approach and fundamental approach (Sarno, 2002, p.17). Technical approach is usually based upon the assertion that investor opinions are entitled to determining changes within exchange rates as well as making predictions through tabling out patterns. The various tools applied within this approach include positioning surveys, customer-flow data concerning FX dealer and other trading rules. It is apparent that these patterns are applied by fund managers towards taking up of informed decisions regarding investments which are short term in nature. Secondly, fundamental approach has the capacity to make accurate forecasts concerning exchange rates. To accomplish this, it considers various factors which facilitate attainment of cycles which are long term in form. Elementary data which is related to a given nation, like unemployment rate, trade balance, productivity indices, inflation rates and GDP are all considered (Streissler, 2002, p.11). Sources point out that this method has always been based upon the idea that a currency’s true worth will ultimately be realized. This implies that the approach is appropriate when ...