Peso Changes. In December 1994, the government of Mexico officially changed the value of the Mexican...
Peso Changes. In December 1994, the government of Mexico officially changed the value of the Mexican peso from 3.163.16 pesos per dollar to 5.475.47 pesos per dollar. What was the percentage change in its value? Was this a depreciation, devaluation, appreciation, or revaluation? Explain. What was the percentage change in its value?
1. The percentage change in peso value is (%). (Round to two decimal places.)
Was this a depreciation, devaluation, appreciation, or revaluation? Explain. (Select all the choices that apply.)
A. Anytime a government sets or resets the value of its currency, it is a managed or fixed exchange rate. If that is the case, any change in its official value must be either a "revaluation" or "depreciation." In thiscase, a revaluation.
B. Anytime a government sets or resets the value of its currency, it is a managed or fixed exchange rate. If that is the case, any change in its official value must be either a "revaluation" or "devaluation." In thiscase, a devaluation.
C. Anytime a government sets or resets the value of its currency, it is a managed or fixed exchange rate. If that is the case, any change in its official value must be either an "appreciation" or "devaluation." In thiscase, an appreciation.
D.This is evident from the fact that it now takes more pesos per U.S. dollar, so its value is less or devalued. In terms of the percentage change calculation, this is indicated by the negative percentage change.
Homework Answers
1.
=(1/5.47)/(1/3.16)-1
=-42.2303%
2.
B. Anytime a government sets or resets the value of its currency,
it is a managed or fixed exchange rate. If that is the case, any
change in its official value must be either a "revaluation" or
"devaluation." In thiscase, a devaluation.
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