Essay Example | Topics and Well Written Essays - 1000 words - 39

Essay ExampleAfter the info collection, average method acting has been used to derive periodic averages of currency exchange rates. The compendium starts from correlation test to understand the nature of relationship. After that graphical interpretations take a shit been developed to analyse the trends in data. Finally, criticism on data has been presented with a few recommendations to improve the method of data collection. Moreover, primary data collection sheets have been also presented to improve the quality of data.Correlation analysis has been done to analyse the nature of relationship in the midst of exports and imports and exchange rates of the countries. For example, how the collected eleven months data of Chinese Yuan is correlated with Chinese exports and imports. The correlation of Yuan with Chinese exports gives 0.59, which means that a confirmative correlation exists between Chinese exports and Yuan (Table IV Appendix). In other words, with increase in the measur e out of Chinese Yuan against Dollar, the exports of China to the United States will increase. Although the data has been collected from very reliable vision still, the derived values of correlation are giving very different results. According to economic concepts, the devaluation of currency is positively related to the exports and negatively related to imports of an economy. The reason is that devaluation of currency makes the products of the country cheaper in the international market and the choose of exports in international market increases. Although the prices of the products decline however, the increased volume of exports enhances the exports value of the country. On the other hand, when goods arrive cheaper because of devaluation of currency, people need more money to buy the imported products therefore, the imports of the country from other states decline. Because of this relation between trade balance and currency exchange,