Hi all, I am absolutely confused when it comes to appreciation/depreciation of foreign/local currency. has anybody got simplified way to understand and retain this concept. Many thanks S
You realise the exam was 3 weeks ago…
exchange rate is the price of one unit of currency in another currency…so 1.95 $/pound means that a pound costs $1.95 … if the forward is 1.90 (or 1.90 /L) then that same pound costs less in the future and is therefore at a discount or has depreciated. Does that help?
Chrismaths: Are you from England? If so, why don’t you guys use the letter Z over there?
I just think in terms of other goods like per barrel or per bushel. In with currency, for example $/euro, if you are making a graph you put it on the vertical axis. If you put time the horizontal axis the currency in the denominator is depreciating and your chart trending downward and apprciating when its trending upward. If you are doing translation problems the historic exchange rate is the oldest, the average is in between, and the current rate or end of period rate is the most recent. So if you want to see if the current rate is higher then the average rate when the currency is appreciating you just draw and upward sloping line against time. In this case the current rate is higher then the average rate which is higher then the historic rate. This worked for me but then I probably failed the exam – but not because of this.
Mnemonics are stupid. Either learn it or don’t learn it. Memorizing a sequence of letters is useless.
Do problems. That’s the best way of learning. Forget memorizing stuff.
don’t worry about exchange rate/currency and focus on the BOP accounts. LOL. just kidding… i’m not sure how mnemonics would help you much for these. fourcastles is right. the best way to hammer these in is to do problems.
“Chrismaths: Are you from England? If so, why don’t you guys use the letter Z over there” I’m English, too. We spell all “…ise” endings with “S”, not “Z”. Don’t know why. I think that using S is seen as traditional, whereas if you use Z you tend to get accused of “using an Americanism” in the same way as if you spell “Colour” and “Labour” as “Color” and “Labor”. Having said that, there is a group in the UK that seeks to make our speliing more phonetic so that foreign learners have an easier time. That would include adopting the Z, which, by the way, we call “Zed”, not " Zee".
We do use Zs. We just use them in the right places.
chrismaths Wrote: ------------------------------------------------------- > http://en.wikipedia.org/wiki/American_and_British_ > English_spelling_differences zzzzzzzzzzzzzzzzzzzzz…
I thought that was quite interesting. Better than endless theads picking over the corpse of an exam we all took three weeks ago…
wankerz
More Cowbell Wrote: ------------------------------------------------------- This is one of the better names on AF.
Yep, we have a winner.
best SNL skit ever