Number of 1 country’s currency that is
equal to 1 unit of another country’s
$1 = 0.6292 €
$1 = 0.5051 £
1€ = $ 1.5892
1£ = $ 1.9797
$1 = 0.7535 €
1€ = $ 1.33
$1 = 0.6809 £
1£ = $ 1.47
Currency U.S. $
Last Trade
U.S. $
¥en
Euro
¥en
12/03
Euro
12/03
1 0.009328
Can $
12/03
U.K. £
12/03
Aust $
12/03
SFranc
12/03
1.222
0.7705
1.733
0.7403
0.7894
1
131
82.59
185.8
79.36
84.62
0.8181 0.007632
1
0.6303
1.418
0.6057
0.6458
107.2
Can $
1.298
0.01211
1.586
1
2.249
0.9608
1.025
U.K. £
0.577 0.005382
0.7053
0.4446
1
0.4272
0.4555
Aust $
1.351
0.0126
1.651
1.041
2.341
1
1.066
SFranc
1.267
0.01182
1.548
0.976
2.195
0.9378
1
Currency
Last
Trade
U.S. $
¥en
Euro
Can $
U.K. £
U.S. $
¥en
3/04
Euro
3/04
1 0.009473
Can $
3/04
U.K. £
3/04
Aust $
3/04
SFranc
3/04
1.214
0.7637
1.816
0.7481
0.7771
1
128.2
80.61
191.7
78.97
82.03
0.8237 0.007803
1
0.629
1.496
0.6162
0.6401
0.01241
1.59
1
2.378
0.9796
1.018
0.5506 0.005216
0.6684
0.4204
1
0.4119
0.4279
105.6
1.31
Aust $
1.337
0.01266
1.623
1.021
2.428
1
1.039
SFranc
1.287
0.01219
1.562
0.9827
2.337
0.9627
1
Currency
Last Trade
1 U.S. $
1 ¥en
=
U.K. £
11/05
AU $
11/05
116.895
0.8293
1.1791
0.5626
1.3469
1.2805
1 0.00709 0.01009 0.00481
0.01152
0.010954
N/A
0.0086
=
11/05
Can $
11/05
¥en
1
Swiss
Franc
11/05
Euro
11/05
U.S. $
1.2059 140.964
1
1.4219
0.6785
1.6242
1.5442
0.8481 99.1350
0.7033
1
0.4771
1.1423
1.0860
207.769
0
1.4739
2.0958
1
2.3940
2.2760
0.7424 86.7886
0.6157
0.8755
0.4177
1
0.9507
1 Sw Franc = 0.7809 91.2885
0.6476
0.9209
0.4394
1.0518
1
1 Euro
=
1 Can $
=
1 U.K. £
= 1.7774
1 AU $
=
Currency
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Nov 2005
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Mar 2005
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Mar 2004
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Dec 2003
Text
Oct 2002
U.S. $
1
1
1
1
1
¥en
116.9
106.33
105.6
107.2
123.3
Euro
0.8293
0. 7696
0.8237
0.8181
1.01
Can $
1.1791
1.216
1.31
1.298
1.5987
U.K. £
0.5626
0.5342
0.5506
0.577
0.6391
Aust $
1.3469
1.2937
1.337
1.351
1.84
SFranc
1.2805
1.196
1.287
1.267
1.49
How many $$ does it take
to get one of theirs?
Currency
Price
Pair
How many $$ you get
with one of theirs?
Currency
Pair
Price
USD/EUR
0.7381
USD/AUD
1.0987
USD/GBP
0.6112
0.0097
USD/JPY
103.0550
CAD/USD 0.9404
USD/CAD
1.0636
CHF/USD 1.1013
USD/CHF
0.9080
EUR/USD 1.3548
AUD/USD 0.9098
GBP/USD 1.6365
JPY/USD
Labatt’s beer is produced in Canada.
In 1990, in Ontario, a six-pack of Labatt’s beer sold
for $6.60 Canadian.
Across the border in
Michigan, a six pack of the
same beer was on sale for
$2.75 U.S.
At the time, the exchange
rate was
$0.75 U.S. = $1.00 Canadian.
In Ontario, $6.60 Canadian.
In Michigan, $2.75 U.S.
$0.75 U.S. = $1.00 Canadian.
1. How much would it cost in U.S.
currency to buy the beer in Ontario?
2. How much would it cost in Canadian
currency to buy the beer in Michigan?
3. Is there an arbitrage opportunity?
4. Where would you buy and where would you sell?
5. How much profit could you expect on a six-pack?
$6.60
x ($2.93
.75 = $4.95
US
$4.95
$2.75
= $2.20
Canadian)
$2.75
.75
= $3.67
Can
Buy in/-Michigan,
sell
inUS
Ontario
1. Fixed
a. $1 = 1/35 oz of Gold
b. 4 German marks = 1/35
oz of Gold
c. $1 = 4 German marks
d. Devaluation – change rate
2. Flexible
a. aka Floating
b. Determined by supply
and demand
c. $1 = 4 German marks
d. Depreciation – change rate
3. Pegged
a. Tied to another currency
b. Often the $
Buyers and Sellers Determine
$ Price of
Exchange Rate
currency
$6
$5
D
S
$4
$3
$2
$1
0
D
S
10
20
30
40
50
60
Quantity of Currency
1. Demand for foreign products
2. Changing economic conditions
- Inflation makes goods more
expensive
3. Interest Rates
4. Government Intervention
Pegging
Would the value of the dollar,
compared to the Swiss franc,
increase if the exchange rate
went from
1.3 francs = $1
to
1.2 francs = $1?
1. How many Japanese yen would have to be converted
to dollars for a person in Japan to purchase a $30,000
SUV if the exchange rate were 125 yen = $1.00
2. How many yen would have to be converted to
dollars to purchase the $30,000 SUV after the exchange
rate changed to 110 yen = $1.00
3. How many dollars would have to be converted to yen
for a person in Altavista to purchase a 3,000,000 yen
Japanese automobile if the exchange rate were 125 yen =
$1.00
4. How many dollars would have to be converted to yen
to purchase the 3,000,000 yen auto after the exchange
rate changed to 110 yen = $1.00
Changes in the Exchange Rate
• Determinants:
1. A change in national income
(relative to trading partners) people
buy more, or less of everything.
2. A change in the inflation rate in
one country.
a. Higher rate decreases demand
b. Lower demand - depreciation
3. A change in interest rates (relative
to rates abroad).
a. High rates attract money
b. Currency appreciates
4. Changes in tastes
$: (1)Appreciation or (2)Depreciation?
1. The US reduces tariffs on Mexican products.
2. Mexico encounters severe inflation.
3. Deteriorating political relations reduce American
tourism in Mexico.
4. The US economy moves into a severe recession
5. A bartender puts a lime in a Corona and beer
sales jump
6. The Mexican government encourages American
firms to invest in Mexican oil fields
7. A large federal government budget deficit raises
interest rates in the US
Euro: (1)Appreciation or (2)Depreciation?
1. An American importer purchases a shipload of
Bordeaux wine.
2. BMW decides to build an assembly plant in LA
3. A CVCC student decides to spend a year studying
at the Sorbonne.
4. A Spanish manufacturer exports machinery to
Morocco on an American freighter.
5. The US incurs a balance of payments deficit in
its transactions with Belgium.
6. A US government bond held by an Italian citizen
matures.
7. It is widely believed that the international value
of the Euro will fall in the near future.
Would each of the following developments cause the dollar to
appreciate or depreciate?
a. The perception by other countries that the quality of US
goods is improving
b. A large budget deficit that raises interest rates in the US
c. Intervention by the Federal Reserve in foreign exchange
markets that results in dollars moving into those markets
d. A poor harvest in most of the grain-producing countries of
the world except the US
e. The expectation of war between several Middle Eastern
countries.