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Currency Fluctuations

Currency Fluctuations. Exchange Rate. The amount of currency in relation to the currency of another country Important factor in international trade Especially to the Canadian economy since we heavily rely on imports and exports. Fluctuating actors. Supply and Demand – “Floating Rate”

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Currency Fluctuations

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  1. Currency Fluctuations

  2. Exchange Rate • The amount of currency in relation to the currency of another country • Important factor in international trade • Especially to the Canadian economy since we heavily rely on imports and exports

  3. Fluctuating actors • Supply and Demand – “Floating Rate” • Demand > Supply • Value Increase = Currency Revaluation • Demand < Supply • Value Decrease = Currency Devaluation

  4. Factors • International Trading • Economic Conditions • Politics • Psychological Factors

  5. International Trade • The more a country exports, the greater the demand for its currency, and the higher the currency exchange.

  6. Economic Conditions / Politics • Two Sides to each of the following: • Inflation rate • Unemployment rate • Gross Domestic Product (GDP) • Interest Rate

  7. Politics

  8. Psychological Factors • Hard Currency = Stable Currency • USD, Euro, CAD etc. • Soft Currency = Unstable Currency, Not as easy to convert • Russian Ruble, KRW, Chinese Yuen, etc.

  9. Strong/Weak Canadian Dollar • Why would you prefer having a strong (high) Canadian dollar? • When do you benefit from it? • Why would you prefer having a weak (low) Canadian dollar? • How would it benefit a Canadian?

  10. Winners of Strong CDN $ • Importers • Individual consumers as well companies • Canadian Travelers • Pro sports Team • Pays their players in USD

  11. Losers of Strong CDN $ • Exporters • Companies as well as individuals • Canadian Tourism • Canadian Retailers • Online and offline

  12. Speculating • Buying, holding, or selling foreign currency in anticipation  Profit • International businesses • Wise to have accounts in different currencies

  13. Homework • Question 23-24 on pg 60-61

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