Discussion Board 1: What is an exchange rate? What is the foreign ...

Question

Discussion Board 1:
What is an exchange rate? What is the foreign exchange market?

How many Mexican pesos can \$1 US dollar purchase as of today? Quote the exchange rate in both the direct and indirect methods.

(The website OANDA is a good resource for exchange rates)

Research the foreign exchange market. What is the daily trading size (in US dollars)? If you are able, find the daily trading sizes of the spot market, futures/forwards and (combined) all other derivative markets.

Discussion Board 2:
What does it mean when a currency “appreciates” or “depreciates”? How might this impact a company operating internationally?

Using the historical section of the OANDA website, graph the monthly exchange rates of the dollar/euro, starting in January of 1999 (when the euro started) through the end of last year. Use the “direct” method to show your exchange rates. What has happened over this time to exchange rate? Based on the factors that influence exchange rates what explanations can you offer to explain what you are seeing? (Please attach or include the graph)

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Discussion Board 1:

1. Exchange rate is the value of one currency compared to another. It shows us how much money in terms of one currency we can get for one unit of any other currency. For example, if we would like to know how much European euro we can get for one dollar we are asking for the exchange rate of dollar in terms of euro. The answer would be 1USD=0.74EUR. Data presented like this, from the American point of view, is called the indirect method of exchange rate quotation...

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