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For the USD exchange rate index, there is no big difference between the two situations.
Image crediThisryce Durbin.
This 17.6percentt increase in the average selling price (despite the unfavourable USD exchange rate) is probably the key growth driver for the company's gross margin.
In a first step, he calculates an estimate for the conditional covariance between a USD exchange rate index and the MSCI stock market return index.
Even tough I am analysing a much shorter time span than Maggiori, my conditional covariance estimate for the USD exchange rate index is fairly close to his.
Domestic stock market returns are calculated from the S&P 500 Index in case of the USD exchange rate index and the SPI for the two CHF exchange rate.
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Figure 3 Oil price and Ringgit-USD exchange rate.
On the downside, you have to pay in pound sterling – no more exploiting the old GBP-USD exchange rate.
Data source: Ringgit-USD Exchange Rate - Bank Negara Malaysia's Monthly Statistical Bulletin Oil Pricee – the US Environmental Information Administration.
To see this, we plot in Figure 3 the evolution of the ringgit-USD exchange rate together with the oil price in the US dollar.
Using this figure with our estimated P/E ratio of 11, this works out to a price estimate of $9 for Deutsche Bank's shares (assuming a EUR-USD exchange rate of 1.15).
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