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    Dollar versus the Euro

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    · On Friday, the New York foreign currency market closed with a quote of $1.0900 / Euro. To stimulate economic activity the Federal Reserve hints that interest rates will be lowered by 50 basis points (½ of 1%). At the close of business on Monday, reacting to speculation that the Fed will lower interest rates, the New York currency market closed with a quote of 1.1250 $ / Euro. Has the US dollar ($) appreciated or depreciated against the Euro? How can you explain your answer?

    · Given the following exchange rates: $US 1.6022 / £ and ¥ 121.95 / $US, how many Japanese yen (¥) are needed to purchase 1 pound sterling (£)?

    · For each of the following direct foreign exchange quotes calculate the equivalent
    Indirect quote (round off your answer using four decimal places):

    â?¬ 0.00776 / Yen

    $0.2723 / Dirham

    $0.0212 / Rupee

    $1.6037 / British Pound

    â?¬ 1.4614 / British Pound

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    https://brainmass.com/economics/exchange-rates/dollar-versus-the-euro-18679

    Solution Preview

    · On Friday, the New York foreign currency market closed with a quote of $1.0900 / Euro. To stimulate economic activity the Federal Reserve hints that interest rates will be lowered by 50 basis points (½ of 1%). At the close of business on Monday, reacting to speculation that the Fed will lower interest rates, the New York currency market closed with a quote of 1.1250 $ / Euro. Has the US ...

    Solution Summary

    as the US dollar ($) appreciated or depreciated against the Euro? How can you explain your answer?

    $2.19