Touring with Taylor

Touring with Taylor

Understanding Foreign Exchange

https://youtu.be/2-n0NO1-qmU?si=C8obDgQ50lwbEmMR

Poll

Is $380 AUD a fair price for floor tickets to see your favorite artist in concert?

• No Way!!!

• No, but I would be willing to pay for some of those upper-level seats

• Maybe, if I had a lot of extra money saved up

• Definitely. No price is too high to see my favorite artist!

Word Cloud

What are some other expenses involved with seeing a concert?

• If one currency becomes more valuable in terms of the other, it appreciates or becomes “stronger”

• If one currency becomes less valuable in terms of the other, it depreciates or becomes “weaker”

• In the foreign exchange market, one currency is exchanged for another

• The price of one currency in terms of the other is the exchange rate

Exchange Rates

Converting Currencies

• Suppose that the USD/EUR exchange rate is 1.20 (you have to give up $1.20 to get a Euro) and you'd like to convert $100 U.S. dollars into euros, simply divide the $100 by 1.20. The result is the number of euros: 83.33

• Converting euros to U.S. dollars means reversing that process: multiply the number of euros by 1.20 to get the number of U.S. dollars.

The demand for a currency arises from the demand for the country’s

• Goods

• Services

• Financial assets

The supply of a currency in the FOREX market arises from making payments in other currencies

In the FOREX market, equilibrium is achieved when the exchange rate is such that QD=QS

The Foreign Exchange Market

We are going to tour with Taylor and practice calculating exchange rates at the tour stops.

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Let's Practice!

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Read the scenarios and fill in the blanks!

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That was fun!
Let's try some more!

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Poll

How well do you understand calculating currency values now?