5 external_environment_economic_exchange_rates

5 external_environment_economic_exchange_rates - tutor2u...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
tutor2u GCSE Business Studies Exchange rates An exchange rate is the value of one currency expressed in terms of another. So £1 may be worth $1.55 and €1.33. X A currency that is getting stronger or appreciating is a currency that is going up in value against another. So £1:$1.5 moving to £1:$1.8 means the pound is getting stronger X A currency that is becoming weaker or depreciating is a currency that is going down in value against another. So £1:$1.8 moving to £1:$1.5 means the pound is getting weaker Currencies change in value against each other all the time. This is because most currencies are based on flexible exchange rates. The notable difference is in the Euro zone (see below). Currencies change in value because there is a change in demand for holding that currency. Households, governments and businesses need other countries currencies to buy their goods and services (e.g.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online