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    Forex: Home Currency Foreign Currency

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    Nicolyn Rae Escalante
    This document discusses foreign exchange (forex) and involves: 1) Comparing two country's currencies and their currency rates through relevant values. 2) Directly or indirectly quoting one currency in terms of another currency as the home or foreign currency. 3) Terms used in American and European currency quotes and how currency appreciation or depreciation affects quotes.

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    Forex: Home Currency Foreign Currency

    Uploaded by

    Nicolyn Rae Escalante
    25 views5 pages
    This document discusses foreign exchange (forex) and involves: 1) Comparing two country's currencies and their currency rates through relevant values. 2) Directly or indirectly quoting one currency in terms of another currency as the home or foreign currency. 3) Terms used in American and European currency quotes and how currency appreciation or depreciation affects quotes.

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    forec

    Original Title

    FOREX

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    This document discusses foreign exchange (forex) and involves: 1) Comparing two country's currencies and their currency rates through relevant values. 2) Directly or indirectly quoting one currency in terms of another currency as the home or foreign currency. 3) Terms used in American and European currency quotes and how currency appreciation or depreciation affects quotes.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    25 views5 pages

    Forex: Home Currency Foreign Currency

    Uploaded by

    Nicolyn Rae Escalante
    This document discusses foreign exchange (forex) and involves: 1) Comparing two country's currencies and their currency rates through relevant values. 2) Directly or indirectly quoting one currency in terms of another currency as the home or foreign currency. 3) Terms used in American and European currency quotes and how currency appreciation or depreciation affects quotes.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 5

    FOREX

    involves two currencies


    compares two country's currencies
    Currency rates = relevant value of currency
    ko[
    Reference Currency
    Home Currency
    the location of which you want to value a currency
    Foreign Currency
    the currency to be valued in regards to home currency

    DIRECTLY QUOTED Direct Quotation


    Home Currency / Foreign Currency
    INDIRECTLY QUOTED Indirect Quotation
    Foreign C. / Home C.

    American terms ( $/FC)


    common currency = US $
    European terms ( FC/$)
    % change of $
    ex: Php 52 / 1 $ Peso Movement of dollar
    Directly quoting the dollar 46
    Presented in European terms + 49 6.522%
    + 51 4.082%
    - 47 -7.843%
    Currency Appreciation + 52 10.638%
    the currency strengthened AVERAGE

    Currency Depreciation
    loss of value of a country's currency with respect to one or more foreign reference currencies
    currency weakens

    (1+r) = (1+re)(1+inf)

    Theoretically, the returns in country 1 should be the same to country b


    re A = re B

    (1+ra) (1+infA)
    =
    (1+rb) (1+infB)

    S = A/B
    So = ((1+ra)/(1+rb))^n
    % change of pesos
    Movement of pesos Gross Returns

    -6.1224% 93.878%
    -3.9216% 96.078%
    8.5106% 108.511%
    -9.6154% 90.385% I
    -2.7872% -3.0186%
    ^ arithmetic mean ^geometric mean
    Brazillian Dollar
    Cost of Debt
    Expected Inflation 7% 2% 104.90%
    USD JAPAN
    Cash flows Yen
    0 -1000 120
    1 400 117.087378641
    2 400 113.677066642
    3 200 110.366084118
    4 600 107.151537979
    5 400 104.030619397
    6 150 101.000601356
    7 150 98.058836268
    8 500 95.2027536583
    9 500 92.4298579206

    Inf. Rate
    US 3%
    Japan 0.50%

    Cost of Capital for US Projects

    Current Yen 120


    1.0248756219

    0.9757281553 1
    0.9473088887 2
    0.9197173676 3
    0.8929294832 4
    0.8669218283 5
    0.841671678 6
    0.8171569689 7
    0.7933562805 8
    0.770248816 9
    0.7478143845 10

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