What Is The Nominal Effective Exchange Rate

Well it’s not good special for international student, we have to change more in our currency money to be US dollar. When U.S dollars stronger than national currency, import are less expensive. So American people can buy products good and services cheaper. In face it will lead to increase demand for the currency needed to purchase products and imported products because you can buy more products or the product is cheaper and it increase the economies in US. For example, we order clothes from china the same amount of money, we can buy more cloth and we won’t have to spend many money to do it. But for the business local currency becomes weak and down in valve, then the products in US are importing become more expensive. Also increase in the demand on the foreign change market more increases the price of its currency, Other country become demanding more US Dollars in order to pay for these services and commodities. International labor increase more if US dollars more strong so They can change US dollars more money in their countries, Changes in nationwide incomes in foreign countries as well as in the United States. On other hand export less because US dollars strong and other countries decrease demand products from US because US products good is more expensive. Also people buy foreign products rather than domestically produced goods and become to effect to US export. It capacity make business

dollar was close to an eight year shortage against the real, having lost more than 33% of its value during 2009 alone. During the past 12 month era, the exchange rate of the U.S. dollar (USD) has diverse from a low of BRL R $1.5310 to in height of BRL $1.7790. During 2010, the United States dollar typically kept an everyday exchange rate between (BRL) R$1.70 and (BRL) R$1.80, occasionally reducing below the (BRL) R$1.70 level.

The currency of India has been falling much recently against the dollar, as the risk adverse global investors start getting worried about the deficits, as efforts are being made by the central bank to stem the slide of the currency. According to Fact Set data, the rupee hit 54.44 against the dollar, in December, 2011. According to the analyst, it is expected that the rupee may continue to weaken further, as Eurozone jitters dovetail with the raising worries on the slow growth rate, fiscal deficits and the current account.

The US dollar is used in the majority of the international transactions and therefore that happens to the American economy, will influence the international financial resources. Dollars bring big consequences both for the USA and for other countries. The economy of many countries depends on currency dollar. The increase in its course reduces the volume of the income in dollars for the country. And change of US dollar more considerably, than change of an exchange rate of the country. On the

The U.S. dollar peaked in value in 2000-2001 and has been in a significant decline ever since. There was a relatively brief period in 2008 when the dollar rebounded quite sharply due to the worldwide financial crisis and economic meltdown, when there was a global rush to the safety of U.S. treasury securities. But since then, the dollar has resumed its long-term downtrend. In the recent years the dollar has been improving relative to other currencies, becausee of the decline in those other currencies.

There are numerous reasons for the sudden decline in value of Australian currency, one of which is the renewed strength of the US dollar, due to the American economy’s acceleration through its recovery. However, there is the additional fact that the RBA has been cutting interest rates, resulting in Australia becoming a less attractive place for investors, as well as the continual impacts of deteriorating commodity prices

I hope you have enjoyed this simple explanation of international trade and foreign exchange rates as it pertains to the current U.S. macro economy.

An increase in the exchange rate of the U.S. dollar relative to a trading partner can result from

Hint : When there is a change in the exchange rate, this would automatically alter the prices of all foreign goods to domestic goods, as the domestic prices are intertwined with the foreign prices. Thus, these changes would affect the trade flows between nations.

Next, the United State firms find it harder to compete in foreign market. When the US dollar strengthens, foreign trade partners will have to pay more euros and pounds in order to make up for the appreciated dollar when they import from the Unites State. The increase in dollar will eventually decline the demand as American made goods become less attractive to buy at the consumer level in foreign country. This is because the United State has to compete with lower price foreign goods. This slump in demand will ultimately translate into thinner profit margins of manufacturers and producers in the United State, reducing expansion potential in the country. The result in the longer term will be slower growth even as the United State consumers up their near term standard of living. Besides, foreign tourists find it more expensive to visit the United State. For example, I’m a Malaysian. If I wanted to exchange money to have a vacation at either the United State of America or Australia, I have to compare the exchange rate. In the past, exchange rate between Australia Dollars(AU) and Malaysia Ringgits(RM) was RM 2.8 per AU while exchange rate between the United State

As the worlds most dominate currency, the USD hold to large advantages of being currency reserved. Each dollar stockpiled and bought in non-US countries is one dollar that the US citizens gave that purchases power against other nations for free. The status of being the main world international trade

In the similar time period Japanese Yen has been in the third position with a turnover position of 20.8% in the year 2005. The overall financial market currency structure has seen a decline in the turnover position of the US Dollar to 85% from a strong position of 88%. Similarly a decline has been in the position of the Japanese Yen to 17.2% from an acceptable turnover position of 20.8%. While considering the trend of these two currencies during the period starting from 2007 and ending at 2010, it is to be noted that minute changes were seen in the two different currencies with regards to their share in foreign currency market. The US Dollar witnessed a continued fall to 84.9% from its previous 85.6% however, the Japanese Yen saw a rise from its previous position of 17.2% to an increase of1.8% that is 19%. During the same time period the US dollar and Japanese Yen were the second most traded paired currencies and was traded at around 14% of the overall foreign currency market second to the US Dollar and Euro pair. Conclusion The foreign exchange market has seen considerable changes owing to the global financial crisis. It is to be seen how different factors like economy and global politics further impact strong currencies like the US Dollar and other competing currencies such as the Japanese Yen.

There are many reasons why the dollar would fluctuate. The strength and weakness of a dollar depends on a number of factors such as inflation and trade deficits. To save the economy from inflation, the Federal Reserve will increase interest rates causing the economy to slow and the value of the dollar to decrease. Trade deficits can also devalue the US dollar. Although the high trade deficit is causing the dollar to fluctuate, the deficit could be a way to make the dollar stronger. Because we are borrowing from other countries, with our interest rates being higher, they would want to buy the US dollar to invest in the interest rate market.

The currency is the Fijian dollar but in comparison to the American dollar is 2-1.

International Financial Management Trial Exam Closed Book Examination INCLUDEPICTURE uvafileserverjligter1DataOnderwijsInternational Financeif2008sbriederLocal SettingsTempRarDI04.890ABS-logo.gif MERGEFORMAT Closed Book Examination Answer as brief and concise as possible redundant or superfluous remarks may lead to a lower score. The maximum score per problem is given between parentheses. The maximum score of the whole exam is 100 points. QUESTION 1 - 20 points SHAPE MERGEFORMAT This graph depicts the REAL value of the broad index which is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a large group of major U.S. trading partners. a) Consider the following table of price levels,