Home’s currency is the peso and trades at 1 peso per dollar. Home has external assets of $200 billion, all of which are denominated in dollars. It has external liabilities of $400 billion, 75% of which are denominated in dollars.
a. Is Home a net creditor or debtor? What is Home’s external wealth?
b. What is Home’s net position in dollar-denominated assets?
c. If the peso depreciates to 1.2 pesos per dollar, what is the change in Home’s external wealth in pesos?