Explain the exchange rate determination between euro and dollar.
Determine money supply between euro and dollar
Explain in context appreciation and depreciation for euro and dollar
The response addresses the queries posted in 531 words with references.
// In this paragraph, we will discuss the factors that determine the exchange rate between euro and dollar. There will be emphasis on the impact of dollar on euro value at international level trade.//
The exchange rate between two currencies shows their value against each other for business and non business transactions. It also shows the purchasing power of one currency in comparison to other currency. The euro currency is stronger than the dollar because of its favorable determinants that make it stronger then other currencies. The dollar value is reduced currently that indicates appreciation in euro value. The exchange rate of euro and dollar increased over the period due to several reasons.
The main determinant of exchange is of interest rate because it provides the means of increase in the value of money in their respective countries. Higher the interest rate ...
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US dollar vs Euro
Congratulations, you just won the Irish Lottery! You bought a ticket while you were on vacation in Ireland, and you just won a 1 million Euro jackpot after all taxes were taken out.
If the current exchange rate is US$1 equals 1.25 Euros, how much did you win in US dollars?
Suppose that the interest rate in Irish banks is 5% for a one year CD. In the USA, the rate is 2% for a one year CD. If you left your winnings in Ireland, how many Euros would you have in a year? If you had taken your winnings back to the USA, how many dollars would you have?
Suppose when you cashed in your CD in Ireland a year from now, the exchange rate had changed from US$1 to 1.25 Euro, to US$1 to 1.30 Euro. How much would your Irish bank account be worth in US$ at that point? Did you do better off leaving your winnings in Ireland or bringing them home to the USA?
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