# Currency Exchange Rate

Am abit confused with the question below.

The solution says (According Kaplan Schweser 2014 Qbanks), “CAD has appreciated by 4.0%, and the JPY has depreciated by 3.8%”.

Kindly assist.

a. depreciated by 3.8%, and the JPY has depreciated by 4.0%

b. appreciated by 3.8%, and the JPY has depreciated by 4.0%

c. appreciated by 4.0%, and the JPY has depreciated by 3.8%

Best Regards

When you get a quote such as JPY/CAD 75 (meaning JPY75 = CAD1.0), you can save yourself a lot of headaches if you think of the base currency – CAD in this case – as if it were a commodity (which, in fact it is): oil, say.

If you think of CAD as oil, then the price of oil has gone from JPY75 to JPY78: oil has appreciated (increased in price).

When you invert the quotes – CAD/JPY 0.0133 and CAD/JPY 0.0128, respectively – then you see that the price of JPY (the commodity in these quotes: the oil) has decreased in price, from CAD0.0133 to CAD0.0128.

I cover this in the article I wrote on currency exchange rates: http://financialexamhelp123.com/currency-exchange-rates/.

Many Thanks S2000.