1. The INR appreciates 3% versus the USD. The EUR depreciates 4% versus the USD. What’s the approximate appreciation or depreciation we might see in the EUR/INR exchange rate?

2. Baylor Bank believes the New Zealand dollar will depreciate over the next 6 months from $.41/NZ$ to $.38/NZ$. The following 6-month interest rates apply: (the rates are periodic rates so you do not need to adjust them at all – we do not need to multiply by 180/360 or anything like that)

Currency                           Lending Rate            Borrowing Rat

Dollars 3.0% 3.25%

New Zealand dollar (NZ$) 4.0% 4.25%

Baylor Bank has the capacity to borrow either NZ$10 million or $5 million. If Baylor Bank’s forecast if correct, what will its U.S. dollar profit be from speculation over the 6-month period?

3. Suppose the exchange rate is €.8544/$. What is the equivalent Euro amount to $156.20?

4. If the exchange rate is €.0771/MXN (Mexican peso), what is the base currency, what is the terms currency?

5. general rule of thumb: exporters like for their home currency to _______; consumers like for the home currency to ______.