BFF3231 2023.1 International Finance
Group Assignment 1 (30% of total mark)
Refer to the file called Assignment 1 Instructions for instructions and to the file called
Assignment 1 Submission file for the group report as a template to report your answers for
the submission. Finally refer to Moodle and the Feedback Fruits links under Assignment 1 for
the Self Reflection and Peer Assessment tasks due by 9.30am, 21st March, 2023.
I uploaded the following on Moodle:
a) a set of slides and
b) a link to a < 1h video on data in international finance presenting these slides,
broadly referring to some of the charts and data seen in lectures 1-3.
In this background material, I showed you various sources of international finance and
banking data that allow easy and elegant plots of time series data, either for standalone
variables or for combinations of variables and countries, namely
- IMF Data
- World Bank Open Data | Data
- About BIS statistics
- Federal Reserve Economic Data | FRED | St. Louis Fed (stlouisfed.org)

The suggestion is to use these data for this assignment, but you should feel free to use other
sources if preferred.
It will also be useful to look at the Central Bank website for your allocated countries. Central
banks' websites have an English version.

Task
Your group was assigned a number during the tutorial. Based on the number you were
assigned, you will be working on 2 countries: Indonesia and one of the following countries
1. Sri Lanka
2. Paraguay
3. South Africa
4. Pakistan
5. Thailand
6. Malaysia
7. Norway
8. Brazil
9. Mexico
10. South Korea
The country corresponding to your number is referred below to as YOURCOUNTRY in this
document - and you will have to discuss this country and Indonesia in parallel.
2

 You are required to construct a set of graphs and provide comments using them.
- The graphs don't need to be all in the same style/format, but they do need to be clearly
drawn and organized.
- Notice that the default charts on the data platforms can be downloaded and easily
inserted into your submission file, so this is an option in some cases.
- You can also choose to download the relevant time series and plot your own ad hoc
chart, so this is another option (be careful with the frequency: if you download, say,
monthly interest rates for Indonesia, you will need monthly interest rates for
YOURCOUNTRY as well). This will allow you to better customize your comparisons and
message.

 Please proceed to answer each question as well as you can.

 A formal introduction and conclusion are not required. The structure of the report
should follow the questions.

 Be precise and concise. Lengthy contorted answers may be less effective than clear
and precise answers that address exactly what we ask.

 Word count: Graphs, graphs titles, graphs captions, and references (if any) are not
counted in the word count. I indicated 1800 words in the instructions: consider that
the ceiling. It's customary to allow a +10% of allowance; try not to use it, but I will
penalize you only if you exceed the target plus the extra allowance.
 If I say "after 2000”, and only, say, post-2002 data are available, use what’s available.
Groups with team members not allocated to their tutorial group and not set up on Moodle
Note where groups have student team members who are not from the same allocated
tutorial, one student from your group will need to email BFF3231@monash.edu and your
tutor by the due date and time with the Assignment 1 Submission file. All group members
from these teams will also need to individually email to Kym / tutor the Self Reflection and
peer Feedback on Assignment 1 file to BFF3231@monash.edu.
3
Question 1. (IMF, FRED, WB)
Plot and describe the evolution of GDP for both Indonesia and YOURCOUNTRY for the period
between 2000 and the most recent data available (it will be typically 2022, depending on the
time series you choose; if you cannot find the data for the early 2000s, start when you can).
Notice that you have various choices regarding what to plot (level vs. growth rates, real vs.
nominal, annual vs. quarterly, total vs. per capita). It is up to you what to choose. Explain
briefly, why you chose that measure. There's no “right” choice, but you may find one measure
easier to discuss than another. For example, in a country with high inflation, the nominal GDP
will appear – well – “inflated” by inflation, hiding its real dynamics, but for a country with low
inflation, or for short periods, the difference may not matter. Chose the same measure for
both countries, or you will be comparing apples and oranges.
Describe in your own words the evolution of GDP in these two countries and any interesting
features that are worth emphasizing either in one or the other country individually or
comparing them (trends, growth changes, cycles, effects of one or another crisis, recessions,
etc.).
Question 2. (FRED, BIS)
Identify the Central Banks of the two countries and describe them briefly using categories
similar to what we've seen in class (objectives, policy rates or other instruments, relevance of
the exchange rate in their policy, relevance of reserves management, etc.).
Plot the policy rates for Indonesia and YOURCOUNTRY since 2000, as well as their differential,
and describe their evolution for the period indicated, including any noteworthy fact or event,
sudden changes, negative rates periods etc. You may consider connecting these variables to
the variables in Question 1 and to the variables in Question 4.

Question 3. (IMF, WB)
After explaining the concept of Balance of Payments and its components briefly, plot its major
components (balances) since 2000 in one chart for YOUR COUNTRY and another chart for
Indonesia (be careful with the signs and remember that they sum to zero due to the Balance
or Payment identity).
Describe them briefly, emphasizing their levels, sign, evolutions, volatility, and possible
reversals.
What happened to the Net Investment Position of these two countries over the past 5 years?
How is this linked to the current account in these particular countries?
4
Question 4. (BIS, hint: there are XLS files)
Plot the inflation rates for the two countries (I suggest monthly) and their difference in one
chart.
In another chart, plot the spot exchange rate as 1 unit of YOURCOUNTRY currency for # units
of Indonesia Rupiah (I suggest monthly, end of the month, but the average within a month, is
also OK).
Describe what you observe and whether you can detect any interesting behaviour or pattern.
Which FX regimes have characterized these countries over this period? (notice that the two
countries may have been determining their FX regime with respect to a third currency, or a
basket of countries, or have a floating regime for all or just part of the period, etc.).
[Potentially useful for this last question: Most currencies are quoted against the U.S. dollar
(or against only a few major currencies). For example, the Indonesian Rupiah and the
Australian Dollar are quoted against the U.S. dollar. But what if we wish to know how many
Australian Dollars it takes to buy an Indonesian Rupiah? We need to calculate the cross rates.
On March 6, 2023, 1 USD bought 15,304.982 IDR
On March 6, 2023 1 USD bought 1.4808 AUD
That is, 15,304.982 IDR = 1.4088 AUD
Or,
, .
, .
=
.
, .

1 IDR = 0.00009199 AUD