By definition, currency appreciation occurs when

Related MCQs

• The currency of country X is pegged to the currency of country Y. Assume that county Y's currency depreciates against the currency of country Z. It is likely that country X will export _______ to country Z and import _______ from country Z.
• The currency of country X is pegged to the currency of country Y. Assume that county Y's currency depreciates against the currency of country Z. It is likely that country X will export _______ to country Z and import _______ from country Z.
• A French-based MNC has just established a subsidiary in Algeria. Shortly after the plant was built, the MNC determines that its exchange rate forecasts, which had previously indicated a slight appreciation in the Algerian dinar were probably false. Instead of a slight appreciation, the MNC now expects that the dinar will depreciate substantially due to political turmoil in Algeria. This new development would likely cause the MNC to __________ its estimate of the previously computed net present value.
• When the value of one currency falls relative to another currency, the exchange rate for the first currency has
• European currency options can be exercised _______; American currency options can be exercised _______.
• An increase in the current account deficit will place _______ pressure on the home currency value, other things equal.
• When a firm perceives that a foreign currency is ________, the firm may attempt direct foreign investment in that country, as the initial outlay should be relatively _______.
• An increase in the current account deficit will place _______ pressure on the home currency value, other things equal.
• Assume the following information regarding UK and European annualized interest rates: Currency Lending Rate Borrowing Rate UK pound (£) 6.73% 7.20% Euro (€) 6.80% 7.28% Milly Bank can borrow either £20 million or €20 million. The current spot rate of the euro is £0.75. Furthermore, Milly Bank expects the spot rate of the euro to be £0.76 in 90 days. What is Milly Bank’s pound profit from speculating if the spot rate of the euro is indeed £0.76 in 90 days?
• If a country experiences high inflation relative to the UK, its exports to the UK should _______________, its imports should ___________, and there is __________ pressure on its currency's equilibrium value.