Foreign Exchange Economics

1. Foreign Exchange

2. Riyals for candy…Riyals for candy…

3. 1. What was a1. What was a “Buck” worth“Buck” worth
in this simulation?in this simulation?
-One Candy Bar-One Candy Bar

4. 2. What was a2. What was a “Riyal” worth?“Riyal” worth?
- A fraction of a- A fraction of a“Buck.”“Buck.”

5. 3. How could we best express the3. How could we best express the
relationship ofrelationship of “Riyals” to “Bucks”?“Riyals” to “Bucks”?
- Lets look at our chart.- Lets look at our chart.

6. 4. How was the value of “Riyals” to
“Bucks” determined in round #1?
- Supply/demand.
- Competition.
- Market interaction.
-*International exchange
rates are determined the
same way.

7. 5. What happened to the value of the
“Riyal” relative to “Buck” in rounds 2
and 3?
- Value decreased = it took
more “Riyals” to obtain a“Buck.”

8. 6. Did the “Buck” gain in value?
NO, throughout the simulation a
“Buck” was worth one candy bar.
=

9. Calculating Foreign Exchange
Amount in Foreign Currency
Current Exchange Rate
= Amount in U.S. Dollars

10. Child number 2 and 3 were sent to a boarding
school in the Philippines ……
Its currency is the Philippine Peso.
Their Exchange Rate = 44.60
350 Pesos
44.60
= $7.85
Current Exchange Rates
http://www.exchangerate.com/
Did Ms. Duke make a good choice?

11. Strong Dollar
Imports
Exports

12. Weak Dollar
Imports
Exports

13. Why would small countries want a depreciated
dollar on the U.S. dollar?
Why is the world upset at China?

14. So where should senior trip be?
France? England?
How about Sri Lanka!
1 Dollar = 104 Rupees