Foreign exchange rates

What is likely to lead to an increase in a country's foreign exchange rate?

Feb/March 2016

The diagram illustrates the market for the Indian rupee quoted in US dollars. The equilibrium point is located at X. If more Americans go on holiday in India and fewer Indians purchase American exports, in which part of the diagram will the new equilibrium price and quantity of the Indian rupee be?

Feb/March 2017

In October 2015, 1 UK pound could be exchanged for 100 Indian rupees. By October 2016, 1 UK pound could be exchanged for 80 Indian rupees. What would be a short-term consequence of this change?

Feb/March 2018

The consequences of a currency’s depreciation depend on the price elasticity of demand for exports and imports. Across the world, trade barriers such as tariffs have fallen. In addition, the exchange of goods and services between countries has grown, and the movement of people has increased to a smaller degree. In some countries, net emigration occurs, with more people leaving than arriving.

Feb/March 2018

What typically falls when a country's foreign exchange rate depreciates?

Feb/March 2019

What could raise the demand for a country’s currency in the foreign exchange market?

Feb/March 2020

What is one benefit of a floating exchange rate for an economy?

Feb/March 2023

The diagram depicts the foreign exchange market for the Singapore dollar (S$) exchanged for the United States dollar (US$). The starting equilibrium point is at X. In the next month, Singapore buys more goods from the US, while Singapore exports to the US remain unchanged. What is the new equilibrium point?

Feb/March 2024

What action could a central bank take to prevent its country’s currency from losing value?

Feb/March 2025

Which pair of changes would increase the price of the Pakistani rupee in the foreign exchange market?

May/June 2015

During 2013, the Singapore Government was worried that the economy could slip into recession. It was putting in place a set of supply-side policy measures to raise productivity, prevent a recession and meet its other economic objectives. It was also trying to lower the international value of the Singapore dollar.

May/June 2015

At present, the US trades oil with the UK. If newly discovered oil and gas reserves in the US reduce its oil imports and raise its oil exports. Starting from the initial equilibrium at X, which letter shows the new equilibrium position for the US exchange rate?

May/June 2016

The Pakistani rupee’s exchange rate shifts from 60 rupees to US$1 to 50 rupees to US$1. What impact will this have on the price of Pakistani goods sold in the US and the price of US goods sold in Pakistan?

May/June 2016

In 2014, the Canadian economy was broadly performing well. Money was largely keeping its value, and unemployment was declining. Even so, the country had increasing household debt and a deficit on the current account of its balance of payments. In 2014, the Canadian Government aimed to boost exports while acknowledging that this could affect the exchange rate.

May/June 2016

During 2015, China was the world’s biggest exporter of manufactured goods and a significant importer of oil and minerals. China lowered the value of the yuan (renminbi) by $2\%$. According to economic theory, what consequence would this devaluation have caused?

May/June 2017

The exchange rate for the South African rand and the Botswana pula decreased by $5.7\%$ between August 2014 and August 2015. What would be the immediate consequence of this?

May/June 2017

During 2015, China was the largest importer of oil in the world. In August 2015, China lowered the value of its currency. What was likely to have happened?

May/June 2017

In June 2015, the Swiss franc appreciated by 30% against the euro. Switzerland's export markets are also shifting. Sales to the USA, UK, India and South Korea are becoming more important, whereas sales to Germany, Italy and France are falling. One possible effect of an appreciation in the exchange rate is a lower inflation rate.

May/June 2017

The Mexican currency (the peso) has declined in value relative to the US dollar. What effect will this have on the Mexican economy?

May/June 2018

In 2015, the South African currency, the rand, fell in value relative to the US dollar. What impact did this have on the US economy?

May/June 2018

In 2014, Kazakhstan's government cut the value of its currency, the tenge. One year on, the country still had a current account deficit. As a result, in 2016 it looked at adopting a floating exchange rate, which could help eliminate the deficit. However, it was worried that this could influence the country’s inflation rate, which was already high at 17%.

May/June 2018

Which definition best describes a foreign exchange rate?

May/June 2019

Global demand for oil is price inelastic and oil is bought using US dollars. If the price of oil falls sharply, what effect could this have on the exchange rate of the US dollar?

May/June 2019

A shift in a country's foreign exchange rate led to a fall in the value of its currency. Which outcome is not likely to occur?

May/June 2019

The Saudi Arabian government is promoting expansion of the private sector. It produces oil at low cost, yet its exports to South Africa have declined lately. South Africa has a floating foreign exchange rate, although its central bank has recently attempted to stop a sharp drop in its foreign exchange rate.

May/June 2019

A car dealer in the US agrees to pay an import price of US$25000 for a Japanese car at the prevailing exchange rate. The US dollar then rises by 10% against the Japanese yen. What is the revised import price that will be paid for the Japanese car?

May/June 2021

What is measured by the foreign exchange rate between Malaysia and the US?

May/June 2021

What does the term foreign exchange rate mean?

May/June 2022

In a fixed exchange rate system, the value of a currency is lowered. What term is used for this?

May/June 2022

What outcome is most likely if a country’s currency loses value when no other economic conditions change?

May/June 2022

A product from Argentina is first sold in the US at $50, while the exchange rate between the two countries is 5 pesos to 1 dollar. The exchange rate then shifts to 10 pesos to 1 dollar, and the product’s price in Argentina stays the same. What is the product’s new US price?

May/June 2023

What factors could raise demand for a country's currency in the foreign exchange market?

May/June 2023

Which government policy would directly cause exports of goods to increase?

May/June 2023

Fishing and tourism are the two main ways a developing country earns income from international trade. If the country’s exchange rate were to depreciate, what would be the most likely outcome?

May/June 2023

In the diagram, curves $D_1$ and $S_1$ show the demand for and supply of the US dollar ($\$$) in relation to the Chinese yuan. What is the most likely reason for the demand curve for US dollars to move from $D_1$ to $D_2$?

May/June 2024

The diagram illustrates the market for the Chinese yuan (¥), quoted in US dollars ($). What might have led to the shift in demand for the yuan from $D_1$ to $D_2$?

May/June 2024

The table gives the average exchange rate for the UK pound (£) against the US dollar ($), meaning the number of $ that may be obtained with £$1$. What is one likely effect of this change on the UK economy?

May/June 2024

The diagram illustrates the market for the Indian rupee in US$. What would make the demand curve for rupees move from $D_1$ to $D_2$?

May/June 2024

In the diagram, D shows the demand curve for the Chinese yuan and S shows the supply curve of the Chinese yuan. The Chinese central bank wants to fix the price of the yuan at $P_1$. What action would it need to take?

May/June 2025

An Argentine product is first sold in the US at $50$ when the exchange rate between the two countries is $5$ pesos for $1$ dollar ($\$$). The exchange rate then changes to $10$ pesos for $1$ dollar, while the product’s price in Argentina stays the same. What is the product’s new US price?

May/June 2025

The table gives the retail price for which the same book may be purchased in four countries. Australia: $14.99$ Australian dollars Canada: $11.99$ Canadian dollars New Zealand: $20.95$ New Zealand dollars United Kingdom: £$6.99$ GB pound What extra information is needed in order to compare the book’s price across the countries in a meaningful way?

May/June 2025

The table gives the value of the UK pound (£) relative to the US dollar ($) in June and September. June: $£1 = \$1.48$ September: $£1 = \$1.32$ What is the most likely short-run effect on the UK economy of this exchange rate change?

May/June 2025

In August 2013, the Indian rupee fell to a lower value against the US dollar than it had in the previous month. What does this mean?

Oct/Nov 2015

In $2009$ the exchange rate for the Singapore dollar shifted from $1.49$ Singapore dollars $= 1$ US dollar to $1.43$ Singapore dollars $= 1$ US dollar. What effect would this have on Singapore's import prices and export prices?

Oct/Nov 2016

Which measure gives the most accurate indication of a currency’s international purchasing power?

Oct/Nov 2017

At first, an Argentine product is sold in the US for $\$50$ when the exchange rate between the two countries is $5$ pesos to $1$ dollar. The exchange rate then changes to $10$ pesos to $1$ dollar, while the product’s price in Argentina stays the same. What is the product’s new price in the US?

Oct/Nov 2017

What term is used for a currency’s external value when it is measured against another currency?

Oct/Nov 2017

The table gives the number of units of foreign currency that the UK pound (UK£) was able to purchase in August 2012 and August 2013. What conclusion can be drawn from the table about how currency values changed between 2012 and 2013?

Oct/Nov 2017

What term is used for an increase in the value of a currency’s exchange rate in a floating system?

Oct/Nov 2017

A country has suffered a devaluation of its currency. What are the probable consequences of the devaluation?

Oct/Nov 2018

In June 2016, Nigeria moved to a floating exchange rate after the country’s central bank had spent months trying to preserve its fixed exchange rate. It had been using foreign currency reserves to support its currency, imposing tariffs and limiting how much foreign currency Nigerians could buy. Most economists expected the Nigerian currency to fall in value. A lower value of the Nigerian naira could help raise output and reduce the deficit on the current account of the country’s balance of payments. In 2015, Nigeria recorded a current account deficit for the first time in 20 years. Countries with a current account deficit often have a higher inflation rate and a lower economic growth rate than countries with a current account surplus. Fig. 1 shows the inflation rate, economic growth rate and the current account balance of selected countries in 2015. Fig. 1: The inflation rate, economic growth rate and current account balance of selected countries in 2015. The countries shown are China, Colombia, Germany, Nigeria and Turkey. The key indicates: Inflation rate; Economic growth rate; Current account balance (% of GDP). The horizontal scale runs from -8 to 10. When there is a current account deficit, the exchange rate can fall, which may push up import prices. A higher cost of imports, including imported food, can speed up inflation. In 2015, in addition to having a current account deficit, tax revenue fell in Nigeria and was below government expenditure. Some economists predicted that the government would cut spending on education and healthcare in 2016 to reduce the difference between tax revenue and government spending. The Nigerian government has been trying to reduce poverty in the country. In 2015, more than 60% of the population were living in poverty. One cause of the high level of absolute poverty was an unemployment rate of 9.5%. One policy measure suggested to reduce poverty in Nigeria is for the government to increase the wages of low-paid workers. The government also wants to diversify the economy because the oil industry provides almost 90% of the country’s export earnings. The oil industry pays high wages to some of its workers and relatively high interest rate payments to local banks. It also creates water pollution and air pollution.

Oct/Nov 2018

The table presents the current account balance of four countries in 2016. It also gives each country’s exchange rate against the US dollar for 2015 and 2016. Which country recorded a trade surplus and also had a stronger currency against the US dollar?

Oct/Nov 2019

What does the term depreciation in the foreign exchange rate mean?

Oct/Nov 2020

Recently, wage rate growth in Kazakhstan has risen, whereas its economic growth rate has weakened. One reason for this is a drop in exports. In order to lift the economic growth rate, the government has raised spending on investment. In August 2015, it introduced a floating foreign exchange rate system in an effort to strengthen the country’s macroeconomic performance.

Oct/Nov 2020

What immediate effect does a country experience when its foreign exchange rate falls?

Oct/Nov 2021

What is one immediate effect on a country when its foreign exchange rate falls?

Oct/Nov 2021

What immediate effect does a fall in a country’s foreign exchange rate have?

Oct/Nov 2021

Jordan uses a fixed foreign exchange rate against the US dollar. As a result, Jordan’s monetary policy is closely tied to the monetary policy of the US. Because confidence in the world economy was low in 2019, central banks across the world, including Jordan and the US, lowered interest rates to encourage growth. However, this could have run against the macroeconomic objective of low inflation.

Oct/Nov 2022

Global demand for oil is price-inelastic, and oil is bought and sold in US dollars. If the price of oil drops sharply, what effect might this have on the US dollar?

Oct/Nov 2023

Why might a devaluation in the international value of an economy’s currency help to reduce unemployment?

Oct/Nov 2023

Which factor would lead to a fall in a country’s exchange rate?

Oct/Nov 2023

A country’s foreign exchange rate rises sharply. Which group in that country will gain directly from this change?

Oct/Nov 2023

The diagram illustrates how the exchange rate market for country X’s $ has changed. Which change in country X could have brought this about?

Oct/Nov 2024

The value of the US dollar against other currencies is determined by demand and supply. What is this statement describing?

Oct/Nov 2024

The diagram illustrates a shift in the exchange rate of the Indian rupee relative to the US$. What might have led to this change in the exchange rate?

Oct/Nov 2024

At present, the US trades oil with the UK. If new oil and gas deposits are found in the US, its oil imports would fall and its oil exports would rise. Starting from the initial equilibrium point X, which letter shows the new equilibrium point for the US exchange rate?

Oct/Nov 2025

Which pairing of changes in export revenue and import expenditure would be most likely to lead to a depreciation in a country’s exchange rate?

Oct/Nov 2025

Which combination of changes would certainly increase the value of the Pakistani rupee in the foreign exchange market?

Oct/Nov 2025