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Assume that you are in Germany. The current spot exchange rate of the Euro (EUR) against...

Assume that you are in Germany. The current spot exchange rate of the Euro (EUR) against the US dollar (USD) is 0.8426 EUR per USD (EUR/USD). Suppose that the spot exchange rate is 0.8730 EUR/USD tomorrow. Has the USD appreciated or depreciated against the EUR? Calculate the percentage change in the USD.

Solutions

Expert Solution

Given the current spot exchange rate is EUR/USD = 0.8426

Let us break the quotation .

We can simply say that inorder to get 1 US dollar we need 0.8426 Euros or we can also say that inorder to get 1 Euor we need 1.18676 Dollars.

Tomorrow the spot exchange rate is EUR/USD is 0.8730

Let us break this quotation

We can simply say that inorder to get 1 US dollar w need 0.8730 Euros or we can also say that inorder to get euro we need 1.1454 Dollars

By this we can clearly say that the Dollar has appreciated against Euro and Euro has depreciated against Dollar

Calculation of % change in USD = (0.8730-0.8426)/0.8426 = 3.604% ( Approximate Value)

jeff jeffy answered 2 years ago
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