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The solution to exchange rates

Shown below are exchange rates for several currencies in relation to the U.S. dollar.

Euro Swiss Franc Mexican Peso
Spot rate 0.90 1.70 11.00
30-day forward rate 0.92 1.80 10.95
60-day forward rate 0.93 1.85 10.70

a. Is the euro appreciating or depreciating against the U.S. dollar? Why?
b. Is the Swiss franc appreciating or depreciating against the U.S. dollar? Why?
c. Is the Mexican peso appreciating or depreciating against the U.S. dollar? Why?
d. Using cross-rates, how many francs will the euro buy, how many pesos will the franc buy, and how many euro will the peso buy?
e. A U.S. company purchases goods from several foreign companies with payment due in euros, francs, and pesos. Would the company be better off paying now or waiting for 60 days? Why?

Please see attached excel file and calculate in excel if possible.

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Please see the attached file.

Shown below are exchange rates for several currencies in relation to the U.S. dollar.

Euro Swiss Franc Mexican Peso
Spot rate 0.90 1.70 11.00
30-day forward rate 0.92 1.80 10.95
60-day forward rate 0.93 1.85 10.70

a. Is the euro appreciating or depreciating against the U.S. dollar? Why?

Euro is depreciating
$1 can buy 0.90 Euros in Spot market
$1 can buy 0.92 Euros in 30 days
$1 can buy 0.93 Euros in 60 days
Thus a dollar can buy more Euros in future

b. Is the Swiss franc ...

Solution Summary

Answers questions on exchange rates

$2.19