Using Exchange Rates. Take a look back at Figure 18.1 to answer the following qu
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Question
Using Exchange Rates. Take a look back at Figure 18.1 to answer the following questions:
a. How much is one euro worth?
b. If you have $200, how many Polish zlotys can you get?
c. If you have four million euros, how many dollars do you have?
d. Which is worth more, a New Zealand dollar or a Singapore dollar?
e. Which is worth more, a Mexican peso or a Chilean peso?
f. How many Swiss francs can you get for a euro? What do you call this rate?
FIGURE 18.1 Currencies & Commodities wSJ.com/fx Exchange rate quotations APRIL 13, 2012 Currencies U.S.-dollar foreign-exchange rates in late New York trading Thurs __ US$ per US$ YTD chg (%) In US$ per US$ (%) Country/currency Country/currency Americas Argentina peso 2276 4.3946 2.0 Czech Rep. koruna 05318 18.802-4.8 1773 5.6409 -1.7 1.3187 7583 -1.7 002073 482.30 7.2 Hungary forint004450 224.72-7.6 1734 5.7664 -3.5 3159 3.1656 -8.2 03399 29.417 -8.5 1482 6.7465 -1.9 05143 19.4450 -1.9 Switzerland franc 1.0974 9112 -2.8 Venezuela b. fuerte .229885 43500 unch 1-mos forward 1.0978 9109 -2.8 1.0989 9100 -2.8 6-mos forward 1.1009 9083 -2.7 5575 1.7936 -6.4 1.5961 6265 -2.6 1.0338 9673 -2.3 1-mos forward1.5958 62672.7 1.0242 .9763 -2.2 3-mos forward 6269 -2.7 1.5941.6273-2.8 5473 1.8273 -2.1 Denmarkkrone 1.0057 9943 -2.6 Euro area euro Canada dollar Chile peso Colombia peso Ecuador US dollar Mexico peso* Peru new sol Uruguay pesot 0005593 1788.00 7.9 Norway krone 1 unch Poland zloty 0768 13.0285 -6.6 Russia rublet 3754 2.664 -1.2 Sweden krona 3-mos forward Asia-Pacific Australian dollar 1.0441 .9578-2.2 Turkey lira@ 1.0406 9610 -2.3 UK pound 1-mos forward 3-mos forward 6-mos forward 1586 6.3058 -0.2 6-mos forward 1288 7.7637 unch China yuan Hong Kong dollar India rupee 01951 51.260 -3.3 Middle East/Africa Indonesia rupiah 0001091 9170 1.5 Bahrain dinar 012362 80.89 5.2 Eqypt pound* 1-mos forward 012366 80.87 4.9 Israel shekel os forward 012374 80.81 5.0 Jordan dinar 012392 80.70 5.1 Kuwait dinar 2.6527 3770 unch 1654 6.0454 -0.1 2675 3.7383 -1.9 1.4115 .7085 -0.1 3.5985 2779-0.1 .0006649 1503.95 -0.1 2667 3.7502 unch 1270 7.8723 -2.7 2723 3.6731 unch . 6-mos forward Malaysiaringgit New Zealand dollar Pakistan rupee Philippines peso Singapore dollar South Korea won Taiwan dollar Thailand baht 3256 3.0713 -3.3 Lebanon pound 8278 1.2080 -6.1 01102 90.745 1.0 South Africa rand 0234 42.645 2.7 UAE dirham 7974 1.2541 -3.3 Saudi Arabiariyal Floating rate tFinancial sGovernment rate Russian Central Bank rate **Commercia)rate .0008809 1135.15-22 03394 29.460-2.7 03245, 30.815 -2.5 Vietnam dong 00004797 20848 -0.9 Source:1CAP plc. Source: The Wall Street Journal, April 13, 2012, © Dow Jones & Co. Reprinted with permissionExplanation / Answer
a) 1 euro = 1.3187 dollars
b) 1 dollar = 3.1656 zlotys => No. of zlotys = 200 x 3.1656 = $633.120
c) No. of dollars = 1.3187 x 4,000,000 = $5,274,800
d) 1 NZD = 0.8278 USD and 1 SGD = 0.7974 USD
=> New Zealand dollar is worth more as it buys more USD dollars than one Singapore dollar
e) 1 MXN = 0.0768 USD and 1 CLP = 0.002073 USD
=> Mexican peso is worth more
f) 1 euro = 1.3187 USD and 1 SF = 1.0974 USD
=> one SF = 1.3187 / 1.0974 = 1.20166 euros
This rate is called as a cross rate.
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