Scribd
Upload
28 views2 pages

Foreign Exchange Rates

The document discusses foreign exchange rates between currencies in different countries using the price of a Big Mac in different places as an example. It explains how exchange rates affect prices and when currencies get stronger or weaker based on money being invested within or outside the country.

Uploaded by

Paula Fana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
28 views2 pages

Foreign Exchange Rates

The document discusses foreign exchange rates between currencies in different countries using the price of a Big Mac in different places as an example. It explains how exchange rates affect prices and when currencies get stronger or weaker based on money being invested within or outside the country.

Uploaded by

Paula Fana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

FOREIGN EXCHANGE RATES

Different countries have their own currencies.


In England, a Big Mac from McDonald's costs £4, in South Africa it costs R20 and in Norway it
costs 48 kr.
he meal is the same in all three countries but in some places it costs more than in others.
If £1 = 𝑅12,41 ( CONVERT POUND TO RAND)
and 1 𝑘𝑟 = 𝑅1,371 ( CONVERT KRONER TO RAND)
this means that a Big Mac in England costs R49,64 and a Big Mac in Norway costs R65,76.
EXCHANGE RATES affect a lot more than just the price of a Big Mac.
The price of oil increases when the South African rand weakens.
This is because when the rand is weaker, we can buy less of other currencies with the same
amount of money.
A currency gets stronger when money is invested in the country.
When we buy products that are made in South Africa, we are investing in South African
business and keeping the money in the country.
When we buy products imported from other countries, we are investing money in those
countries and as a result, the rand will weaken.
The more South African products we buy, the greater the demand for them will be and
more jobs will become available for South Africans.

THE THREE CURRENCIES YOU ARE MOST LIKELY to see are the British pound (£), the American
dollar ($) and the euro (€).
WORKED EXAMPLE : FOREIGN EXCHANGE RATES
Saba wants to travel to see her family in Spain.
She has been given R10 000 spending money.
How many euros can she buy if the exchange rate is currently 1€ = 𝑅10,68?
SOLUTION
Step 1. Write down the equation
Let the equivalent amount in euros be 𝑥
10 000
𝑥= = 936,33
10.68
Step 2. Write the final answer
Saba can buy € 936,33 with R10 000

ANSWERS
Q2= 𝑹 𝟏𝟓𝟒𝟎
Q1== 𝑹𝟏 𝟑𝟓𝟎

You might also like