One may try to understand what exactly a foreign exchange rate is. To help understand, let’s view a foreign exchange rate as exchanging one dollar at a department store for a product. If one were to go into a department store and purchase a pair of socks in a three pack for one dollar, or each for 33 cents, one would be able to relate that the dollar-to-socks exchange rate is three socks because one exchanged a single dollar for three pairs of socks. Similarly, the sock-to-dollar exchange rate would be one-third of a dollar, meaning 33 cents. This is because if one decides to sell a single pair of socks, one would get 33 cents in exchange. (Moffatt)…
Currencies are no different than any other good; the exchange rate, or the “price” of one currency relative to another, is determined by supply relative to demand…
A foreign exchange rate is the rate at which one currency would be exchanged for another. It is essentially the value of a currency when compared to another and is determined by two fundamental forces of economics, supply and demand. When the supply of a currency exceeds the demand, the value of the currency falls. However when the demand for a currency exceeds the supply the value rises. When the…
1) First, describe in your own words the significance and differences in foreign currency exchange rates.…
When the dollar declines in value against foreign currencies, it takes more dollars to buy foreign goods. So foreign goods become more…
Fluctuations in the exchange rate of the Australian dollar can have significant implications on the Australian economy. The exchange rate is the price of one currency in terms of another economy’s currency. Typically in the case of Australia, the Australian dollar is measured in terms of the US dollar. Changes in the exchange rate, whether the alteration is an appreciation or depreciation, can have negative or positive impacts on the Australian economy.…
The U. S. dollar versus the Japanese yen exchange rate refers to how man yen one dollar…
12. Other things the same, if the exchange rate changes from 115 yen per dollar to 125 yen per dollar, the dollar has a. appreciated and so buys more Japanese goods.…
The exchange rate tells you how much one unit of currency is worth when converted to another…
When the value of the U.S. dollar appreciates against another country's currency, we may purchase more of the foreign currency with a dollar.…
2. When a currency is allowed to increase or decrease in value relative to other currencies, the currency is said to:…
From figure: 1, it is evident that within the time period of 5 years (2005 – 2010), the Indian Rupee hovered in the range between 44 (approximately) to 46 against the US Dollar displaying its maximum appreciation in value in the first quarter of 2008 when the US economy was suffering from its worst phase of recession triggered by the ‘bubble – bust’ in the housing sector due to sub – prime crisis. However, the first two quarters of 2009 observed the steady appreciation of US Dollar against Indian Rupee again followed by gradual declines and finally stabilizing around the nominal exchange rate of 1 US Dollar = 46 Indian Rupees by the end of 2010.…
Figure 3 shows us the strength of the pound against the dollar. The conversion rate started at 1.4 in 200 and increased to 1.8 in mid 2003. After a dip in 2005, the exchange rate reached 2 in 2007.…
Fluctuations in the dollar exchange rate affect the value of debt held by foreigners by making the debt worth more or less to foreign investors. If the dollar becomes stronger, it is worth more in foreign countries. This means that the debt held by the foreigners would be worth more as well. If the dollar becomes weaker, it is worth less in foreign countries. The debt held by foreigners would then be worth less.…
Chinese for ten years now have maintained a fixed exchange rate for their currency, the yuan, relative to the dollar. The rate has been pegged at about 8.28 yuan/dollar for the entire period. What has resulted from this is that when the dollar has appreciated or depreciated in value relative…