Is the exchange rate quote for the U.S. dollar a direct or indirect quote on the (a) yen? (b) sterling (British Pound)?

1

• Is the exchange rate quote for the U.S. dollar a
  direct or indirect quote on the (a) yen? (b)
  sterling (British Pound)?
• If 1116 yen which is the quoted and which is
  base currency?
• From Thursday to Friday, what was the percentage
  change in the value of the dollar against the
  yen? (b) sterling?

2

• CAPITAL MARKET allocates debt and equity
  resources
• OFFSHORE FINANCIAL CENTERS Operational (London)
  and Booking (islands)
• INTERBANK (LIBOR) rates
• HEDGING - insurance
• ARBITRAGE instantaneous
• SPOT RATE FORWARD RATE
• CURRENCY OPTION

3

• 1 120
• Base currency is , quoted currency is .
• Direct quote on , indirect quote on .
• 1 0.00833
• is quoted currency direct quote
• Direct quote 1/Indirect quote
• Indirect quote 1/Direct quote

4
PERCENT CHANGE

• YIELD IS ON BASE CURRENCY
• January 1D5, May 1D4
• Change (Pn-Po)/Po x 100
• (4-5/5) x 100 -20

5
MEXICO CRISIS 1994

• Fast growth
• Portfolio investment
• Chiapas assassination
• Rising U.S. interest rates
• 94 devaluation 50 bil. loan

6
ARGENTINA 2001-2002

• Populism
• Hyperinflation
• Currency board -
• Brazil devalues in 1999
• U.S. strong
• Debt crisis, Peso loses 70 of value

7
EURO DEPRECIATION 02

• Cash under the mattress?
• Taxman? Police?
• Spain Dinero B est. 53 bil.
• Italy 175 bil?