Philipp Polnjak

Economics IB2 HL
14.01.2011

Economics Currency Exchange Project

This assignment was to “Hypothetically” or to some extent virtually

exchange money from one currency to another several times over a time
period of about one and a half months. The Goal was to attempt to play off the
change of the value in currency to obtain a profit. The initial given investment
was 1, 000, 000 Euro on the 01.12.2011. we had to trade among at least three
different types of currencies during the time period given. The Attempt should
to to Gain a profit however not necessary. A minimum of 9 transactions are
needed though.

Block 1
Change (currency and To (currency and amount) Exchange rate Date
amount)
Euro; 300, 000 Latvian Lat; 216, 000 0.724 01.12.2010;
14:18:54
Reason for the change (I have decided to sell ….., b/c):
· I changed 300, 000 Euros to Latvian lats, as the currency seems rather stable. This would be
because the Lat is pegged to several other currencies. The support and investment behind the
Lat allows it to remain in a global same state or value when other currencies do change.
· I had chosen to move money out of the Euro because of the possibility that the Euro would
fall more, is has fallen slightly lately, and the Eurozone nations which are in trouble can not
make this any better. Also the Entering of Estonia could change the value of the Euro.

Change (currency and To (currency and amount) Exchange rate Date

amount)
Euro; 300, 000 CHF; 407, 400 1.356 01.12.2010;
14:25:34
Reason for the change (I have decided to sell ….., b/c):
· Again as with the LVL, The CHF is a stable currency, thus a kind of safe bond where i can
keep a great amount of money without having to worry about a loss or the fall in value of
this currency
· I chose to have 3/10 of my Euros transferred, because in some sense i would think that the
Euro would fall in value comparatively, thus i would gain some in the change back.
· I had chosen to move money out of the Euro because of the possibility that the Euro would
fall more, is has fallen slightly lately, and the Eurozone nations which are in trouble can not
make this any better. Also the Entering of Estonia could change the value of the Euro.
Block 2
Change (currency and To (currency and amount) Exchange rate Date
amount)
Euro; 300, 000 USD; 393, 500 1.312 01.12.2010;
14:43:13
Reason for the change (I have decided to sell ….., b/c):
· The decision to exchange 300,000 euro to dollars came with the changing values of both
currencies, as the dollar seems to be rather stable if not strengthening in value, and the euro
falling in value. With the Baltic state Estonia entering the Eurozone, the Euro will fall in
value even more.
· I had chosen to move money out of the Euro because of the possibility that the Euro would
fall more, is has fallen slightly lately, and the Eurozone nations which are in trouble can not
make this any better. Also the Entering of Estonia could change the value of the Euro.
Change (currency and To (currency and amount) Exchange rate Date
amount)
LVL; 100, 000 Pound; 129, 250 1.2413 03.12.2010;
12:40:30
Reason for the change (I have decided to sell ….., b/c):
· The decision to exchange 100,000 Lats to Sterling was a risk I had made with the possibility
to gain a great amount from. As the UK Pound is a non-pegged currency which can fluctuate
much more then other common currencies.
· The lat is steadily pegged to the Euro, which means that the lat is also effected by the Euro
value fall.
· The Lat is far to stable and consistent to earn much money, thus I move away from the Lat
for a greater possibility to earn money. this comes with a risk though.
Block 3:
Change (currency and To (currency and amount) Exchange rate Date
amount)
Euro; 100, 000 Yen; 11, 245, 300 112.453 15.12.2010;
16:13:56
**
Change (currency and To (currency and amount) Exchange rate Date
amount)
Yen; 11, 245, 300 Euro; 103, 232. 85 0.00918 20.12.2010;
16:40:30
**
Block 4:
Change (currency and To (currency and amount) Exchange rate Date
amount)
Euro; 103, 232. 85 Yen; 11, 723, 967. 50 113.45311 21.12.2010;
21:54:20
**
Change (currency and To (currency and amount) Exchange rate Date
amount)
Yen; 11, 723, 967. 50 Euro; 109, 372. 62 0.00931 23.12.2010;
15:26:37
**
Block 5:
Change (currency and To (currency and amount) Exchange rate Date
amount)
Euro; 109, 372. 62 Yen; 12, 389, 799. 71 112.46916 27.12.2010;
23:46:57
**
Change (currency and To (currency and amount) Exchange rate Date
amount)
Yen; 12, 389, 799. 71 Euro; 118, 455. 30 0.00947 28.12.2010;
17:16:45
**
**The Exchange between the Euro and Yen (Japan), was a little personal project i did
during the christmas time. The point of it was to earn money from attempting to
quickly swap currencies between each other by predicting when one currency would
gain or lose in value. Also part of this was to attempt to predict when a currency would
be at the peak of its value, so the trade would be most rewarding. The Fluctuation of
each currency in this case, is exactly the same , ass even if one would loose in value
and the other would gain value, the only change is that amount of one currency
needed to invest to get the same amount of the other currency then before.
I though of this being a good idea, because firstly it was fun for me during the winter
break.
My major reasoning for the exchange each time was the amount of value the currency
went up, because by observing the rise and fall of between these two currencies in the
last year. I could more or less tell then the currency would be at its peak.

Block 6:
Change (currency and To (currency and amount) Exchange rate Date
amount)
Pound; 129,250 USD; 203, 593. 31 1.57516 28.12.2010;
11:27:41
Reason for the change (I have decided to sell ….., b/c):
· The reason for this exchange was to benefit off the change between the dollar and the
pound, because this exchange rate was a seeming spike which allowed me to change my
pounds to the dollar for a very reasonable price.
· my intention was to sell off all my pounds at this spike, and then when the ratio falls again
to buy pounds again when they become cheaper again.
Change (currency and To (currency and amount) Exchange rate Date
amount)
USD; 297, 000 British Pound; 194, 324. 13 0.65329 28.12.2010;
23:45:16
Reason for the change (I have decided to sell ….., b/c):
· As predicted the spike was only short term and not a ongoing rise in the value of the pound,
thus the exchange back to the pound from the dollar after less then a full day, has earned me
a significant amount of money.
· I could repeat this process several time, however at this point i find it more rewarding to
wait a little longer, possibly a better rate will come up.
Block 7:
Change (currency and To (currency and amount) Exchange rate Date
amount)
CHF; 407,400 British Pound; 282, 416. 29 0.693214 03.01.2011;
20:15:54
Reason for the change (I have decided to sell ….., b/c):
· Watching the CHF for some time now, it was visible at this point that the inclining value of
the CHF had to end soon, as it was hitting its peak. The peak a few days ago was showing
the instability of the high value, and that this would end soon, I believe that this would be
the last high of the CHF, before falling in value again.
· The CHF is a strong and sturdy currency, which had a consistent rise and fall of value rate.
· Selling all the currency to pounds is a middle ground before finally trading back to Euros
again.

Block 8:
Change (currency and To (currency and amount) Exchange rate Date
amount)
Latvian Lat;116, 000 Dollar USD; 220, 359. 48 1.89103 10.01.2011;
14:35:22
Reason for the change (I have decided to sell ….., b/c):
· Changing the remainder of my lats into Dollars was a last chance to earn some more money,
as due to deductive reasoning, I predict that the dollar will rise in proportion to the Euro
talking about value. This would mean that in a weeks time or so the risen value change
would have earned me money.
· The exchange rate seems reasonable, as proportionally the value of the lat should have fallen
with the dollar rising, because of the latvian pegging system to the Euro.
Change (currency and To (currency and amount) Exchange rate Date
amount)
British Pound; 476,740. 43 USD; 747, 099. 93 1.56710 12.01.2011;
12:35:48
Reason for the change (I have decided to sell ….., b/c):
· Prior to the Final exchange back to Euros,i wanted to simplify everything and change the
rest of my pounds to USD, which would be the last foreign type of currency in my
possession.
· Plus the exchange rate was appealing as the pound was falling in value again, and that I
caught the moment when it had a minor spoke again. Thus this last trade might bring
revenue as well.
Date Time Currency
Euro Dollar Lat Pound CHF Yen
30.11.2010 11:14:46 1 000, 000 0 0 0 0 0
01.12.2010 14:18:54 700, 000 0 216, 000 0 0 0
01.10.2010 14:45:12 100, 000 393, 500 216, 000 0 407, 400 0
03.12.2010 12:40:33 100, 000 393, 500 116, 000 129, 250 407, 400 0
15.12.2010 16:34:55 0 393, 500 116, 000 129, 250 407, 400 11, 245, 300
23.12.2010 12:40:33 109, 372. 62 393, 500 116, 000 129, 250 407, 400 0
27.12.2010 23:50:23 0 393, 500 116, 000 129, 250 407, 400 12, 389, 799. 71
28.12.2010 17:30:56 118, 455. 30 393, 500 116, 000 129, 250 407, 400 0
28.12.2010 12:40:33 118, 455. 30 597, 095. 31 116, 000 0 407, 400 0
29.12.2010 11:41:29 118, 455. 30 300, 095. 31 116, 000 194, 324. 13 407, 400 0
03.01.2011 21:34:21 118, 455. 30 300, 095. 31 116, 000 476, 740. 43 0 0
10.01.2011 15:34:27 118, 455. 30 520, 454. 79 0 476, 740. 43 0 0
12.01.2011 16:32:53 118, 455. 30 1, 267, 554. 73 0 0 0 0

Final Amount in Euros:

Date Time To Currency From USD Exchange
(Euro) Ratio

12.01.2011 13:58:23 979, 009. 55 1, 267, 554. 73 0.77236

Final Euro Stand

1, 097, 463. 85 €
One Million, Ninety-Seven Thousand, Four Hundred and Sixty-Three, Euros, and
Eighty-Five Cents

A Profit of 97,463.85

Source for Real time currency exchange:

http://www.xe.com/?c=CHF