Discover answers to your most pressing questions at Westonci.ca, the ultimate Q&A platform that connects you with expert solutions. Discover a wealth of knowledge from professionals across various disciplines on our user-friendly Q&A platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.
Sagot :
Answer:
The approximate appreciation or depreciation we might see in the MXN/JPY cross exchange rate is 3%.
Explanation:
The approximate appreciation or depreciation we might see in the MXN/JPY cross exchange rate can be stated using the folowing 3 steps.
Step 1. State the initial exchange rates of the currency pairs.
Let first assume the initial exchange rates are as follows:
USD1 = JPY1
USD1 = MXN1
Therefore, we have the initial cross rate as follows:
MXN1 = USD1 = JPY1
MXN1 = JPY1
Step 2. Determine the new exchange rates
The new exchange rates can be determined as follows:
When the USD depreciates 2% versus the JPY, this implies that USD1 * (100% + 2%) = USD1.02 has to be exchanged for JPY1. Therefore, we now have:
USD1.02 = JPY1, or
USD1 = JPY1/1.02
USD1 = JPY0.98
Also, when The USD appreciates 1% versus the MXN, this implies that USD1 * (100% - 1%) = USD0.99 has to be exchanged for MXN1. Therefore, we now have:
USD0.99 = MXN1, or
USD1 = MXN1/0.99
USD1 = MXN1.01
Therefore, we have the new cross rate as follows:
MXN1.01 = USD1 = JPY0.98
MXN1.01 = JPY0.98
MXN1.01 / 1.01 = JPY0.98/1.01
MXN1 = JPY0.97, or
MXN1/0.97 = JPY0.97/0.97
MXN1.03 = JPY1
Therefore, the new exchange rates are as follows:
USD1.02 = JPY1
USD0.99 = MXN1
MXN1.03 = JPY1
c. Determination of appreciation or depreciation we might see in the MXN/JPY
Percentage of depreciation of MXN against JPY = ((Initial MXN/JPY - New MXN/JPY) / Initial MXN/YPY) * 100 = ((1.03 - 1) / 1) * 100 = 3%
Since the percentage of depreciation of MXN against JPY is 3%, this also implies that the percentage of appreciation of JPY against MXN is 3%.
Therefore, the approximate appreciation or depreciation we might see in the MXN/JPY cross exchange rate is 3%.
We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Your questions are important to us at Westonci.ca. Visit again for expert answers and reliable information.
