Exchange Rates Digression56Ch 8 - RTA- Example of how exchange rates affect foreign trade•U.S. exporter agrees to sell $300,000 worth of computers to a British firm. Assume the for the moment that the U.S. - U.K. exchange rate is £1 = $2. •To keep this simple, let’s assume to pay for the computers, the British firms writes a £150,000 check and sends it the U.S. exporter. The exchange and sale are made.•The U.S. exporter sells the £150,000 check to a bank in NYC for $300,000. The NYC bank charges a fee for the currency exchange. The bank then debits the account of the British firm for £150,000 and deposits this in the bank’s vault for a future sale to some U.S. buyerthat needs pounds.