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# 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!

# Assessing our learning

Tobago City Industrial estate - mini case study