Welcome to Westonci.ca, your ultimate destination for finding answers to a wide range of questions from experts. Explore thousands of questions and answers from a knowledgeable community of experts on our user-friendly platform. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.
Sagot :
The approximate appreciation or depreciation we might see in the MXN/JPY cross exchange rate is 3%.
What is Depriciation?
The term depreciation refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life. Depreciation represents how much of an asset's value has been used.
The approximate appreciation or depreciation we might see in the MXN/JPY cross exchange rate can be stated using the following 3 steps.
Step 1. State the initial exchange rates of the currency pairs.
Let first assume the initial exchange rates are as follows:
USD1 = JPY1
USD1 = MXN1
Therefore, we have the initial cross rate as follows:
MXN1 = USD1 = JPY1
MXN1 = JPY1
Step 2. Determine the new exchange rates
The new exchange rates can be determined as follows:
When the USD depreciates 2% versus the JPY, this implies that
USD1 X (100% + 2%) = USD1.02
has to be exchanged for JPY1.
Therefore, we now have:
USD1.02 = JPY1, or
USD1 = JPY1/1.02
USD1 = JPY0.98
Also, when The USD appreciates 1% versus the MXN, this implies that USD1 X (100% - 1%) = USD0.99
has to be exchanged for MXN1.
Therefore, we now have:
USD0.99 = MXN1, or
USD1 = MXN1/0.99
USD1 = MXN1.01
Therefore, we have the new cross rate as follows:
MXN1.01 = USD1 = JPY0.98
MXN1.01 = JPY0.98
MXN1.01 / 1.01 = JPY0.98/1.01
MXN1 = JPY0.97, or
MXN1/0.97 = JPY0.97/0.97
MXN1.03 = JPY1
Therefore, the new exchange rates are as follows:
USD1.02 = JPY1
USD0.99 = MXN1
MXN1.03 = JPY1
c. Determination of appreciation or depreciation we might see in the MXN/JPY
Percentage of depreciation of MXN against JPY = ((Initial MXN/JPY - New MXN/JPY) / Initial MXN/YPY) X 100 = ((1.03 - 1) / 1) * 100 = 3%
Since the percentage of depreciation of MXN against JPY is 3%, this also implies that the percentage of appreciation of JPY against MXN is 3%.
Thus, the approximate appreciation or depreciation we might see in the MXN/JPY cross exchange rate is 3%.
Learn more about Depreciation from:
https://brainly.com/question/18276560
#SPJ1
Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Your questions are important to us at Westonci.ca. Visit again for expert answers and reliable information.
