The Most Sensitive Exchange Rates for Tin Based on the Major Commodity Production Countries

This paper examines the most sensitive exchange rates for tin price based on China and Indonesia that these are the world’s first and second largest tin producers. The export data from these countries have shared over 75 per cent of global tin supply that relates significantly with the Indonesian exchange rate based on the Canonical Correlation Analysis (CCA). Furthermore, the future tin prices are forecasted using the weighted least squares (WLS) model. This model is selected since it takes into account the non-normally distribution and heteroscedasticity of the original data. Overall, this result suggests that the Indonesian exchange rate is superior in predicting the future tin price rather than the Chinese exchange rate while China is the largest tin producer in the world. This is caused that the Chinese exchange rate cannot appreciate to other currency baskets.