International Finance (BWFFK3043) A241

Distribution of Marks (100%)

Final Exam 40%

Mid Term Exam 15%
Quiz 5%

Group:
Assignment 1 5%
Assignment 2 15%

Individual:
Online Forum 4%
Case Study 8%
Written Assignment 8%

ALL COURSEWORK ASSIGNMENTS MUST BE SUBMITTED VIA ONLINE LEARNING IN

PDF FILE

NOTE THAT ALL ASSIGNMENTS/ONLINE TESTS SUBMITTED MUST HAVE TITLE PAGE

(FINAL EXAM) (40%)

The examination would be 2.5 hours. The examination is comprehensive, and therefore, may cover all topics
in the syllabus. The examination paper contained 6 structured questions tested on both concept/theories
and calculation/problem-based questions. Note that students who do not comply with the 80% lecture
attendance requirement may be barred from sitting for the final examination.

MID-SEMESTER TEST (15%)

The test would be held on Monday, 28 April 2025, (Group A: 10:15 to 11:15 am; Group B: 11:45am to
12:45pmam (Venue: FE03). It would encompass the first four topics as specified in the syllabus. The test
paper would comprise THIRTY (30) multiple choice questions.

QUIZ (5%)

The quiz would comprise 10 True/False questions covering Topics 1, 2, 3 and 4. Students must complete
the quiz within 10 minutes. Deadline: 24 April 2025 (during class)

INSTRUCTION ON ASSIGNMENTS

Individual Assignment

1. Online Forum (4%) - will be based on the discussion of current issues internationally, which are
cryptocurrency, central bank digital currency, and fintech and AI in finance. The forum will be carried
out on 27 March 2025 and ended at 15 May 2025. The forum has 2 parts and students are required
to read and discuss individually (Refer to Activity 3 and Activity 4 of your online learning)

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 2. Written Assignment (8%) (Submission deadline: 19 April 2025)

Central Bank Digital Currencies (CBDCs) are gaining global attention as countries explore their potential
to modernize financial systems, enhance payment efficiency, and strengthen monetary policy. While some
nations have actively implemented or piloted CBDCs, others remain cautious due to concerns over financial
stability, cybersecurity, and economic impact. Malaysia, through Bank Negara Malaysia (BNM), has
adopted a prudent approach in assessing the feasibility of a digital Ringgit. However, discussions continue
on whether Malaysia should introduce a CBDC.

This assignment requires students to critically analyze the feasibility of implementing a CBDC in Malaysia.
They must explore the potential benefits and challenges and conclude with a justified stance on whether
Malaysia should move forward with issuing a CBDC.

Instructions:

Introduction- Provide a brief overview of CBDCs, explaining their purpose and how they differ from
cryptocurrencies and existing digital payment systems. Explain Malaysia’s current stance on CBDCs and
why this topic is important for the country’s financial future.

Potential Benefits of CBDC for Malaysia-Discuss the possible advantages of issuing a digital Ringgit,
considering the following aspects: (1) Financial Inclusion: Can CBDCs improve access to financial services,
especially for the unbanked population? (2) Payment Efficiency & Cost Reduction: How could a CBDC
enhance the efficiency and security of transactions? (3) Monetary Policy Implementation: Can a CBDC
provide better control over money supply and inflation?

Challenges and Risks of CBDC Implementation-Critically evaluate the key challenges and risks
associated with introducing a CBDC in Malaysia, including: (1) Financial Stability & Banking Sector
Disruption: Will CBDCs lead to bank disintermediation, affecting traditional banking models? (2)
Cybersecurity & Privacy Concerns: How can Malaysia ensure the security of a digital Ringgit while
protecting users’ privacy? (3) Regulatory & Operational Issues: What legal, technological, and regulatory
hurdles must be addressed?

Analyze at least two countries- whereby one country successfully implemented and another country
that failed and rejected CBDCs. (1) Compare their experiences and assess what lessons Malaysia can
learn from them (2) Public Acceptance & Adoption: Will Malaysians trust and adopt CBDCs, given the
existing digital payment landscape?

Conclusion: Provide a well-reasoned argument on whether Malaysia should implement a CBDC. Support
your stance with evidence, considering both benefits and risks..

Note: Make sure to support your arguments with evidence from reputable sources, such as academic articles,
books, and reports from international organizations. Use appropriate citation styles, such as APA, and
proofread your paper carefully before submitting it. The essay must be less than 1500 words with times new
roman (font) and 1.5 spacing. Please cite when you write. Make sure you write your references in APA
format.

3. Case Study -(8%). Deadline: 1 May 2025

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Students would be required to submit, individually, their solutions to the case stated below. Marks would
be awarded based on the written answers provided by the student.

The Depreciating Indian Rupees

India has been experiencing a significant currency depreciation since October 2024. The Indian Rupee (INR)
has weakened from INR 83.15/USD in October 2024 to INR 85.82/USD by January 8, 2025. This sharp
decline in the Rupee’s value has raised concerns about its impact on inflation, trade balance, and overall
economic stability.

One of the primary drivers of the Rupee’s weakness is the persistent capital outflows triggered by foreign
investors pulling funds out of Indian markets. The US Federal Reserve’s aggressive monetary policy has
also played a crucial role. With US interest rates remaining high—hovering between 4.75% and 5.00% as
of September 2024—global investors have shifted their capital toward US assets, increasing demand for the
US Dollar. This shift has drained foreign exchange reserves in India and further pressured the Rupee.
Additionally, rising crude oil prices have compounded the problem. India, a major oil importer, has seen its
trade deficit widen as energy costs surge, increasing the demand for US Dollars to pay for imports. The
persistent deficit has intensified depreciation pressures on the Rupee.

Domestic economic concerns have also fuelled the currency's slide. While India's economy remains
resilient, inflationary pressures and concerns over fiscal discipline have eroded investor confidence. The
Reserve Bank of India (RBI) has intervened periodically in the foreign exchange market to curb volatility,
but its measures have yet to prevent the Rupee’s decline. Market speculators, anticipating further
depreciation, have increased their short positions against the Rupee, exacerbating the downward trend. In
response, the Indian government has implemented measures to stabilize the Rupee. The RBI has undertaken
dollar sales in the forex market to ease volatility, while the government has emphasized policies aimed at
attracting foreign investments and boosting exports. However, challenges remain as global economic
uncertainties continue to weigh on emerging market currencies.

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Rohan Mehta, the Chief Finance Officer of Aryan Exports Ltd., a leading textile manufacturer based in
Mumbai, India, is closely monitoring the situation. Aryan Exports relies on an international banking
arrangement with JP Morgan in London for its foreign trade transactions. The company must make monthly
payments in US Dollars to its American suppliers. With the ongoing depreciation of the Rupee, Rohan is
concerned about rising costs, which could squeeze profit margins. To mitigate currency risk, he is exploring
hedging strategies, ensuring the company's financial stability amid volatile exchange rate movements.

1. Mr. Rohan asks Bank A and Bank B for the exchange rates to convert Indian Rupees (INR) to U.S.
Dollars (USD). He has INR100 million, which Aryam has approved for him to use. Can Mr. Rohan
make a profit or loss in INR by using locational arbitrage? Explain your answer. You can assume
there are no extra costs like fees or commissions.

Bid Ask
Bank A (INR/USD) 85.1125 85.1129
Bank B (INR/USD) 85.1124 85.1128

2. Mr. Rohan wants to make a profit using triangular arbitrage. He notices that the exchange rates
provided by Bank X, Bank Y, and Bank Z might allow him to take advantage of currency mispricing.
If he uses his approved INR100 million, how much profit can he make in INR? Help Rafael calculate
the profit.

Bid Ask
Bank X (USD/AUD) 0.6315 0.6321
Bank Y (INR/AUD) 54.0852 54.0861
Bank Z (INR/USD) 85.0115 85.0555

3. Suppose the exchange rates given by Bank X and Bank Z stay the same. What should the bid rate
and ask rate (INR/AUD) of Bank Y be to ensure no arbitrage profit is possible? Calculate these
rates.

4. Aryan is considering a covered interest arbitrage strategy for an upcoming payment to their Thai
supplier, Sawadee, in 9 months in Thai Baht (THB). Given the bank's provided information, how can
Aryan evaluate if a covered interest arbitrage opportunity exists and what steps would be involved?

Currency Borrow Invest

THB 7.25% 6.00%
INR 6.50% 5.20%
Bid and Ask Spot Rate
THB/INR 0.3968 0.3972
Bid and Ask 9-month Forward Rate
INR/THB 2.7502 2.7510

(a) Based on authorized fund of INR100 million or equivalent, which country should Aryan borrow
and invest in if the company intends to get profit from covered interest arbitrage? (b) Should Rohan
enter a long position or short position on a 270-day forward contract in THB? (c) Determine the
amount of profit from this covered interest arbitrage in INR.

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Group Assignments

Form a team consists of FIVE (5) members. Make sure your group has mixed characters in terms of
gender and race.

When working in a team, students are expected to:

• Treat other members with courtesy and respect;
• Honour the ground rules established by the team;
• Contribute substantially and proportionally to the final project;
• Ensure enough familiarity with the entire contents of the group project/assignment so as to be able to
sign off on it as original work;
• Meet the project timeline as established by the team.

Resolving conflicts: Conflicts are part of the team’s process of learning how to work together effectively
and when handled well can generate creativity and bring-multiple perspectives to the solution.

Guidelines:

Group Assignment 1 (5 marks) (Submission Deadline: 24 May 2025)

In 2023, Malaysia ranked 19th globally in terms of GDP (current US$), 19th in total exports, and 24th in
economic complexity according to the Economic Complexity Index (ECI). In 2022, Malaysia ranked as
69th in GDP per capita (current US$).

The top exports of Malaysia are (1) integrated circuit (2) refined petroleums, (3) Crude Petroleum, (4)
petroleum gas, (5) palm oil, (6) solar power diodes (7) phone devices including smatphones, (8)
computers including optical readers, (9) oscilloscopes and spectrum analyzers (10)
Unrecorded sound media

The top export destinations of Malaysia are Singapore (15.4%), China (13.5%), USA(11.3%), Hong
Kong(6.3%), Japan(6%), Thailand(3.8%), South Korea (3.9%) Vietnam(3.64%), Indonesia(3.57%),
Australia(3.5%)

Based on the information above, gather and analyse the currency exchange (daily data) for the last 180
days (or more) using line chart.

(a) SGD/MYR; (b) CNY/MYR; (c) USD/MYR (d) JPY/MYR e) HKD/MYR

Based on the line chart, discuss the movement of the currencies for the last 180 days and justify it. Explain
your projection for MYR in the future.

The writing must be not more than 1000 words (1.5 spacing with Times New Roman)

Group Assignment 2 (15 marks) (Submission Deadline: 15 June 2025)

Each group is assigned two MNEs in different region for comparative analysis. Below are the
company pairings per group:

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Group Assignments:

Group 1: Toyota (Japan) vs. Volkswagen (Germany) – Automotive Industry

Group 2: HSBC (UK) vs. Citibank (USA) – Banking & Financial Services
Group 3: Samsung (South Korea) vs. Apple (USA) – Consumer Electronics
Group 4: Nestlé (Switzerland) vs. Unilever (UK/Netherlands) – Food & Beverage
Group 5: Alibaba (China) vs. Amazon (USA) – E-commerce & Cloud Computing
Group 6: BP (UK) vs. ExxonMobil (USA) – Oil & Gas
Group 7: Tata Motors (India) vs. BYD (China) – Automotive Industry
Group 8: Sony (Japan) vs. LG (South Korea) – Consumer Electronics
Group 9: Pfizer (USA) vs. AstraZeneca (UK) – Pharmaceuticals
Group 10: TotalEnergies (France) vs. Petrobras (Brazil) – Energy Sector
Group 11: Siemens (Germany) vs. General Electric (USA) – Industrial Manufacturing
Group 12: Emirates Airlines (UAE) vs. Singapore Airlines (Singapore) – Aviation Industry

Each group must conduct an in-depth comparative analysis of their assigned MNEs and present a well-
structured research report (12%) (The report must be less than 5000 words with times new roman
(font) and 1.5 spacing.)

Caution: When compare please choose the same year(s) for both companies

MNE Overview – (1) Provide a detailed description of both MNEs, including their history, headquarters,
industry, and major markets. (2) Explain the products or services they deliver and their comparative
advantage—how they differentiate themselves from competitors. (3) Identify and compare the MNEs' core
internationalization strategies (e.g., market-seeking, efficiency-seeking, resource-seeking).

Internationalization Strategy and Challenges-(1) Compare the extent of internationalization—which

company is more globally diversified? (2) Analyze how each MNE expanded internationally (e.g., mergers,
acquisitions, joint ventures, franchising, licensing) (3) Discuss key challenges each MNE faced due to
internationalization, such as (a) Political and regulatory risks (b)Supply chain disruptions (c) Cultural
adaptation issues (d) Trade barriers and tariffs (4) Compare how both MNEs adapted to and managed these
challenges.

Financial Stability and Market Engagement-(1) Compare the financial health of both MNEs based on
key indicators from their latest annual reports (a) Revenue growth (b)Profitability (Net Profit Margin, ROA,
ROE) (c) Debt levels (Debt-to-Equity Ratio) (d) Liquidity (Current Ratio) (2) Analyse the geographical
market spread and depth of market engagement for both MNEs. (3) Compare the primary and secondary
sources of financing used by both companies (e.g., retained earnings, debt financing, equity financing,
bonds, government subsidies).

Financial Market Risks and Risk Management Strategies- (1) Identify the major financial market risks
both MNEs face, such as (a) Foreign exchange (FX) risk (b) Interest rate risk (c) Credit risk (d) Commodity
price risk (e)Liquidity risk (2) Provide quantitative analysis of these risks using available financial data.
Example (a) FX Risk = (MNE’s foreign currency exposure × currency volatility) (b)
Debt Risk = (Total Debt / Equity Ratio) (c) Liquidity Risk = (Current Assets / Current Liabilities) (3)
Compare the risk management strategies used by both MNEs, including (a)Hedging techniques (derivatives,
forward contracts, currency swaps) (b) Diversification of financial instruments (c) Cash flow management
(d) Capital structure adjustments

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Mergers, Acquisitions, and Industry Dynamics- (1) Identify and compare any major mergers or
acquisitions (M&As) conducted by both MNEs. (2) Discuss the motivating factors behind these acquisitions
(e.g., market expansion, cost efficiency, competitive positioning). (3) Evaluate how the market reacted to
these acquisitions (e.g., share price movements, investor sentiment). (4) Compare how industry-specific
factors influence the MNEs’ level of internationalization and risk exposures.

Corporate Governance and Ethical Considerations – (1) Compare the corporate governance culture of
both MNEs, including: (a) Board structure and executive leadership, (b) Shareholder rights and
transparency (c) Compliance with international financial reporting standards (d) Assess whether either
MNE has faced corporate governance controversies (e.g., fraud, corruption, ethical breaches).

Conclusion: Provide recommendations on how each MNE can improve its governance practices.

Evaluation Criteria:
Depth of Analysis & Critical Thinking – Demonstrates strong analytical skills in evaluating MNE
financial stability and strategic risks.
Comparative Case Study Evaluation – Provides a well-researched comparison of the two MNEs.
Use of Evidence – Supports claims with high-quality sources and financial data.
Language & Presentation – Well-structured arguments, professional formatting, and clear writing

Presentation (3%)

The marks for individual student will be given based on the group presentation on Assignment 2. Make a
video and share the link in the report. The length of the video should not exceed 10 minutes. The link of
the video should be written in the submitted report.

Summary of Assignments/Quizzes/Exam with Deadlines

Deadlines
Forum (refer to Activity 3 and 4) Now and ended at 15 May 2025
Written Assignment 19 April 2025
Quiz 24 April 2025
Mid Term Exam 28 April 2025
Case Study 1 May 2025
Group Assignment 1 24 May 2025
Group Assignment 2 15 June 2025
Final Exam HEA