Question

can you please do all work in steps on a paper if possible

Exercises: The Foreign Exchange Market and Exchange Rate Determination EXERCISE 8 (Exchange rate determination) The exchange rate has changed from 1.13 EUR/USD to 1.16 EUR/USD. a) By how much has the euro appreciated against the dollar? b) By how much did the dollar depreciated against the euro?

Answer 1

a)Euro appreciated against the dollar

here

V1 = Base currency, Euro is the base currency

V2 = Quote currency, US dollar is the quote currency

Percent change in appreciation = (V2 - V1) / V1 *100

  V1 = 1.13 EUR

V2= 1.16 USD

Percentage change in appreciation = (1.16 - 1.13) / 1.13 * 100

=0.03 /1.13 *100

=0.02654*100

= 2.6548%

b)dollar depreciated against euro

Percentage change in depreciation = (V1 - V2) / V2 *100

  V1 = 1.13 EUR

V2 = 1.16 USD

= (1.13 - 1.16) / 1.16 *100

    = -0.03/ 1.16 * 100

=-0.02586 * 100

=-2.586%