Exchange Rates

Learning outcomes:

By the end of this series of lessons you should be able to:

Define the term exchange rate

Calculate exchange rates

Understand and explain how exchange rates appreicate and depreciate in value

Discuss the impact of changing exchange rate on business

What is an exchange rate?

Exchange rates can be defined as "the price of one currency in terms of another"

Example:

US $1 = MYR 4.39

This means that US$1 can buy MYR4.39

Exchange Rate Fluctuations

Exchange rate depreciation = the fall in the value of a currency in terms of other currencies.

For example:  if the value of the dollar falls in value (when measured by its exchange rate against other currencies) from $2 to $1.50 then the value of the dollar has DEPRECIATED in value.

Exchange rate appreciation = a rise in the value of a currency in terms of other currencies.

For example: if the value of the dollar raises in value (when measured by its exchange rate against other currencies) from $2 to $2.50 then the value of the dollar has APPRECIATED in value

Who are the winners and losers of an appreciation and deprecition of currency?

Task: Using the following links research the winners and losers of an appreciation and depreciation changes (fluctations).

Also refer to the photo copied handouts that go with this tackk!

Copy and complete the table

Assessing our learning

Tobago City Industrial estate - mini case study