Foreign exchange rates fluctuate continually NO NAME

Foreign exchange - Americans while goods and services from the U.S will become more expensive for foreigners causing imports to rise and exports to

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Foreign exchange rates fluctuate continually. For a person who would want to travel to Great Britain first must exchange United States dollars for British pounds. The value of the U.S. dollar in Great Britain sometimes will differ greatly at different times. For example an American family budget of 10,000 dollars exchanged for the number of British pounds that can be purchased would be about 1.5 times greater if the currency would be exchanged in March of 2009 than in November of 2007. Date of Exchange GBP/USD GBD Amount that 10,000 USD Can buy 11/9/2007 2.0894 10,000/2.0894= 4,786 pounds 3/13/2009 1.3971 10,000/1.3971= 7,158 pounds For a company or government that trade billions of dollars daily even a small change in the exchange rate becomes significant. When the U.S. dollar becomes stronger foreign goods and services become cheaper for
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Unformatted text preview: Americans; while goods and services from the U.S. will become more expensive for foreigners causing imports to rise and exports to decline; a weak dollar causes the reverse scenario. More expensive imported goods and services decrease imports while cheaper American goods and service’s increase exports. The trade balance of any country is largely determined by the value of the domestic currency in relation to other currencies. When the foreign exchange rate of currency changes it takes at least several months before it has any effect on the volume of imports and exports. Question two: No I have not had the pleasure of experiencing any of these exchange rates and do not think I would want to. ******Graph of the GBP/USD exchange rate from late 2006 to April 2011****** Reference N.A., webpage,
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This note was uploaded on 11/01/2011 for the course ECON 220 taught by Professor Dr.leo during the Spring '10 term at AIU Online.

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