The exchange rate on April 5, 2013 between U.S. dollars (USD) and the Swiss fran

Question

The exchange rate on April 5, 2013 between U.S. dollars (USD) and the Swiss franc was 1USD = 0.935996 SFr, and the exchange rate between the dollar and the Japanese yen was 1USD = 96.70511 yen.

(a) What was the exchange rate between Swiss francs and yen? (Hint: Be sure to specify which currency has the exchange rate you state in terms of the other currency.) Please show answer to four (4) decimal places.

(b) One year ago, I USD was worth about 82 yen. What is happening to the yen with respect to the dollar over the past year and what is one likely major impact on trade between the two countries?

Explanation / Answer

1 USD/ 1 SFr =  0.935996

1 USD/ 1 yen = 96.70511

Hence 1 SFr = 96.70511 /0.935996 yen = 1 SFr 103.3179 yen = Answer a)

Since the USD is worth more yen now, the value of yen is depreciating with respect to the USD.. The implication is that the exports of Japan to USA will most likely increase (in volume or in USD) while imports of Japan from USA will most probably decrease (in volume or in USD)

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