Foreign exchange rates

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

May/June 2016

In 2014, the Canadian economy was, on the whole, performing well. The value of money was largely being maintained 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 wanted exports to rise while accepting that this could affect the exchange rate.

May/June 2016

Which government policy is most likely to lead to a higher volume of exports?

May/June 2017

In 2015, China ranked as the world’s largest exporter of manufactured goods and was also a major importer of oil and minerals. China then devalued the yuan (renminbi) by $2\%$. According to economic theory, what would be a consequence of this devaluation?

May/June 2017

In June 2015, the Swiss franc increased in value by 30% against the euro. Switzerland’s export markets are also shifting: exports to the USA, UK, India and South Korea are becoming more significant, whereas exports to Germany, Italy and France are losing importance. One likely consequence of an appreciation in the exchange rate is a lower inflation rate.

May/June 2017

The Mexican currency (the peso) has lost value relative to the US dollar. What will be the impact of this on the Mexican economy?

May/June 2018

During 2015, the South African currency (the rand) lost value against the US dollar. What impact did this have on the US economy?

May/June 2018

In 2014, Kazakhstan's government devalued the tenge, its currency. One year later, the country still had a current account deficit. So, in 2016 it considered switching to a floating exchange rate, which might help eliminate the deficit. However, it was worried that this could affect 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

The global demand for oil is price-inelastic and oil is purchased in US dollars. If the price of oil were to drop sharply, what effect might this have on the exchange rate of the US dollar?

May/June 2019

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

May/June 2019

A US car dealer agrees to an import price of US$25 000 for a Japanese car at the prevailing exchange rate. The US dollar then rises by 10% against the Japanese yen. What is the new import price that will be paid for the Japanese car?

May/June 2021

What does the term foreign exchange rate mean?

May/June 2022

The value of a currency in a fixed exchange rate system is lowered. What name is given to this?

May/June 2022

What outcome is most likely to follow a fall in the value of a country's currency when nothing else in the economy changes?

May/June 2022

Australia’s foreign exchange rate changes over time. The value of Australia’s exports is usually above the value of its imports. Australia is Papua New Guinea’s chief trading partner. In 2019, the government of Papua New Guinea raised income tax to bring down its inflation rate. It also used other policy measures to lift its economic growth rate.

May/June 2022

A product from Argentina is first sold in the US at $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 new price of the product in the US?

May/June 2023

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

May/June 2023

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

May/June 2024

The diagram illustrates the market for the Chinese yuan (¥), with the price expressed 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 of the UK pound (£) against the US dollar ($), meaning how many $ can be purchased with £1. What is a likely consequence of this change for the UK economy?

May/June 2024

From the diagram, D represents the demand curve for the Chinese yuan, while S represents the supply curve of the Chinese yuan. The Chinese central bank wants to fix the yuan’s price at $P_1$. Which action would it need to carry out?

May/June 2025

A product from Argentina is first sold in the US at $50 when the exchange rate between the two countries stands at 5 pesos for 1 dollar ($). The exchange rate then shifts 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 at which one book can be purchased in four countries. What extra information is needed to compare the book’s price meaningfully across the countries?

May/June 2025

During August 2013, the Indian rupee fell to a lower level against the US dollar than it had been in the previous month. What is the meaning of this?

Oct/Nov 2015

In 2013, the Argentinian Government was attempting to halt the decline in the international value of the Argentinian peso by introducing quotas. The peso's depreciation was not anticipated because the country was recording a growing current account surplus on its balance of payments. Normally, a shift like this in the current account would cause an appreciation.

Oct/Nov 2015

During 2009, the exchange rate for the Singapore dollar shifted from $1.49 = 1$ 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

What is the term used for the external value of one currency expressed in another currency?

Oct/Nov 2017

The table indicates 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 is called an increase in a currency’s exchange rate value under a floating exchange rate system?

Oct/Nov 2017

In August 2015, China lowered the value of its currency, the yuan. The Chinese Government was aiming to boost output, including food output. It had seen a slowdown in its economic growth. By contrast, some other countries had in fact experienced a fall in output. One reason for the weakening of economic growth in some countries was problems linked to their commercial banks. Some commercial banks were at risk of closing down.

Oct/Nov 2017

A country has undergone 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 its central bank had spent several months trying to hold on to a fixed exchange rate. To support its currency, it had been using foreign currency reserves to buy it, imposing tariffs and restricting how much foreign currency Nigerians could purchase. Most economists believed that the Nigerian currency would depreciate. A lower value of the Nigerian naira could help to raise output and cut the deficit on the country’s current account of the 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 presents the inflation rate, economic growth rate and current account balance of selected countries in 2015. When there is a current account deficit, the exchange rate can fall and this may push up import prices. A higher price of imports, including imported food, can speed up inflation. In 2015, Nigeria not only had a current account deficit, but tax revenue also declined and was below government expenditure. Some economists forecast that the government would reduce spending on education and healthcare in 2016 in order to narrow the gap between tax revenue and government spending. The Nigerian government has been working to reduce poverty in the country. In 2015, over 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 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 workers and relatively high interest rate payments to local banks. It also causes water pollution and air pollution.

Oct/Nov 2018

Recently in Kazakhstan, wage rate growth has risen, yet the pace of economic growth has fallen. One reason is a decrease in exports. To raise the economic growth rate, the government has boosted 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 fall in a country's foreign exchange rate have on that country?

Oct/Nov 2021

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

Oct/Nov 2021

How would lowering the international value of an economy’s currency help to reduce unemployment?

Oct/Nov 2023

What factor would lead to a country’s exchange rate falling?

Oct/Nov 2023

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

Oct/Nov 2024

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

Oct/Nov 2024

The central bank of Madagascar steps in within the country’s foreign exchange market. Even so, Madagascar mainly operates a market economic system. Almost $70\%$ of Madagascar’s population live in poverty. A large share of the nation’s industries are labour-intensive. In 2020, Madagascar recorded an economic growth rate of $6\%$ and a current account deficit on its balance of payments of $0.6bn.

Oct/Nov 2024

Which combination of changes in export revenue and import spending is most likely to make a country’s exchange rate depreciate?

Oct/Nov 2025

Which set of changes would certainly increase the value of the Pakistani rupee on the foreign exchange market?

Oct/Nov 2025