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 = 0.6809 £

1€ = $ 1.33 1£ = $ 1.47

CurrencyLast Trade

U.S. $ ¥en12/03

Euro 12/03

Can $ 12/03

U.K. £ 12/03

Aust $ 12/03

SFranc 12/03

U.S. $ 1 0.009328 1.222 0.7705 1.733 0.7403 0.7894

¥en 107.2 1 131 82.59 185.8 79.36 84.62

Euro 0.8181 0.007632 1 0.6303 1.418 0.6057 0.6458

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

CurrencyLast Trade

U.S. $¥en

3/04Euro 3/04

Can $3/04

U.K. £ 3/04

Aust $ 3/04

SFranc 3/04

U.S. $ 1 0.009473 1.214 0.7637 1.816 0.7481 0.7771

¥en 105.6 1 128.2 80.61 191.7 78.97 82.03

Euro 0.8237 0.007803 1 0.629 1.496 0.6162 0.6401

Can $ 1.31 0.01241 1.59 1 2.378 0.9796 1.018

U.K. £ 0.5506 0.005216 0.6684 0.4204 1 0.4119 0.4279

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

CurrencyLast Trade

U.S. $N/A

¥en11/05

Euro 11/05

Can $ 11/05

U.K. £ 11/05

AU $ 11/05

Swiss Franc

11/051 116.895 0.8293 1.1791 0.5626 1.3469 1.2805

0.0086 1 0.00709 0.01009 0.00481 0.01152 0.010954

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

1.7774207.769

01.4739 2.0958 1 2.3940 2.2760

0.7424 86.7886 0.6157 0.8755 0.4177 1 0.9507

0.7809 91.2885 0.6476 0.9209 0.4394 1.0518 1

 1 U.S. $ =

 1 ¥en =

 1 Euro =

 1 Can $ =

 1 U.K. £ =

 1 AU $ =

 1 Sw Franc =

Currency Yahoo Nov 2005

Yahoo Mar 2005

Yahoo Mar 2004

Yahoo Dec 2003

TextOct 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

Currency Pair

Price

EUR/USD 1.3548

AUD/USD 0.9098

GBP/USD 1.6365

JPY/USD 0.0097

CAD/USD 0.9404

CHF/USD 1.1013

Currency Pair

Price

USD/EUR 0.7381

USD/AUD 1.0987

USD/GBP 0.6112

USD/JPY 103.0550

USD/CAD 1.0636

USD/CHF 0.9080

How many $$ you get with one of theirs?

How many $$ does it take to get one of theirs?

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 .75 = $4.95 US $2.75 / .75 = $3.67 Can Buy in Michigan, sell in Ontario

$4.95 - $2.75 = $2.20 US ($2.93 Canadian)

d. Devaluation – change rate

1. Fixeda. $1 = 1/35 oz of Gold

b. 4 German marks = 1/35 oz of Goldc. $1 = 4 German marks

d. Depreciation – change rate

2. Flexiblea. aka Floating

b. Determined by supply and demandc. $1 = 4 German marks

3. Peggeda. Tied to another currency

b. Often the $

$ Price of currency

Quantity of Currency

$6

$5

$4

$3

$2

$1

10 20 30 40 50 600

D

Buyers and Sellers Determine Exchange

Rate

D

S

S

1. Demand for foreign products2. 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 demandb. Lower demand - depreciation

3. A change in interest rates (relative to rates abroad). a. High rates attract moneyb. 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 recession5. A bartender puts a lime in a Corona and beer

sales jump6. 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 LA3. 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.