Investigate current exchange rates with at least two countries outside The United States to make comparisons...
Investigate current exchange rates with at least two countries outside The United States to make comparisons on how the current exchange rates might affect trade with our country. I chose Germany and Switzerland, how does their exchange rate with the United States affect trade?
Homework Answers
Currency exchange rate plays an important role in determining the trade of a country. In similar manner the exchange rate of US dollar with the euro and Swiss franc respectively will impact the trade pattern of US. Currently the exchange rate of USD to euro is 1dollar per 0.88 euro. When value of USD in terms of any other other currency changes it will lead to either depreciation or appreciation of a currency. In last few days it has been observed that the the USD has appreciated with respect to euro which will deteriorate the trade account of US. When a currency appreciate the goods of domestically produced will become costly for Germany however the goods of Germany will become cheaper for US which will increase the import. Therefore, the net export will fall for US Trade account.
In case of Swiss franc it has been observed that exchange rate is 1USD per 0.99 Swiss franc. Suppose the USD has depreciated which will happen if value of USD decrease with respect to Swiss franc then it will make the Switzerland goods costly for US. However the US goods demand in Switzerland will increase because they are cheaper for foreign country. Therefore, the trade account will improve which lead to rise in net export value.
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Investigate current exchange rates with at least two countries
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