One year ago, the spot exchange rate between Japanese yen and Swiss franc was S-1 1/SFr...

 

Transcribed Image Text:

One year ago, the spot exchange rate between Japanese yen and Swiss franc was S-1 1\/SFr = ¥160/SFr. Today, the spot rate is So¥/SF = ¥155/SFr. Inflation dur- ing the year was p* = 2 percent and p 3 percent in Japan and Switzerland, respectively. SFr = a. What was the percentage change in the nominal value of the Swiss franc? b. One year ago, what nominal exchange rate would you have predicted for today based on the difference in inflation rates? c. What was the percentage change in the real exchange rate, xo the year? ¥/SFr, during , d. What was the percentage change in the relative purchasing power of the franc? e. What was the percentage change in the relative purchasing power of the yen? One year ago, the spot exchange rate between Japanese yen and Swiss franc was S-1 1\/SFr = ¥160/SFr. Today, the spot rate is So¥/SF = ¥155/SFr. Inflation dur- ing the year was p* = 2 percent and p 3 percent in Japan and Switzerland, respectively. SFr = a. What was the percentage change in the nominal value of the Swiss franc? b. One year ago, what nominal exchange rate would you have predicted for today based on the difference in inflation rates? c. What was the percentage change in the real exchange rate, xo the year? ¥/SFr, during , d. What was the percentage change in the relative purchasing power of the franc? e. What was the percentage change in the relative purchasing power of the yen?

Answer rating: 100% (QA)

To answer the questions well use the formula for calculating the percentage change in an exchange rate Percentage Change New Value Old Value ... View the full answer