Question

Calculate the depreciation rate of AUD against the dollar in the period July-December 2019. Select a day of the first and last week of the period to find the exchange rate of that day. Working with American or direct terms, present the calculation and write what has happened to the dollar in that period: the dollar has _________________ (depreciated or appreciated) _____% in the period.

Includes the exchange rate on the date

If you obtain in your calculation a negative percentage is an appreciation of the dollar while a positive percentage is a depreciation of the dollar.

Answer 1

The appreciation or depreciation of dollar depends on the dates we take in the first and last week of the given period of July to December 2019.

(1)

Taking 1st July and 31st December 2019

Exchange rates in those dates

1st July , 1AUD = US$0.6965

31st December, 1AUD = US$0.7015

This shows that the Australian dollar had appreciated and US dollar has depreciated.

A.

Rate = (0.6965-0.7015)/0.6965 x 100 = -0.7179%

This is the rate of appreciation of AUD against Dollar

B.

If we want depreciation of Dollar against AUD,

On 1st July, $1 = 1/0.6965 = AUD1.43575

On December 31st, $1 = 1/0.7015 = AUD1.42552

Rate = (1.43575-1.42552)/1.43575 x100 = 0.7125%

This is the rate of depreciation of Dollar against AUD

(2)

If we take some other dates, July 3rd and December 25th

On July 3rd, 1AUD = $0.7035

On December 25th, 1AUD = $0.6927

This shows that the Australian dollar has depreciated and the Dollar has appreciated

A.

Rate = (0.7035-0.6927)/0.7035 x 100 = 1.5352%

This is the rate of depreciation of AUD against US$

B.

If we want appreciation of dollar (USD) against AUD$

On 3rd July, $1 = 1/0.7015 = 1.4255

On 25th December, $1 = 1/0.6927 = 1.4436

Rate = (1.4255-1.4436)/1.4255 x 100 = -1.2697%

This is the rate of appreciation of US$ against AUD.

In the question, it is asked whether the dollar (not Australian dollar) whether has depreciated or appreciated and it's %. The answer depends on the days we take from within a week of beginning and ending of period.

The answer will vary based on the dates we take

1. The dollar has "depreciated" "0.7125%" in the period.

2. The dollar has "appreciated" "1.2697" in the period

And many more answers are posssible based on the dates we take

Note :

For a given two exchange rates, the depreciation of one currency will not be same as appreciation of other currency.

In the First Point,

The rate of depreciation of dollar against AUD is "0.7125"

The rate of appreciation of AUD against dollar is "0.7179"