1. (12 points) The pound dropped from $1.54/pound 3 year ago to $1.23/pound recently. (1) Is this a direct quote or indirect quote, assuming the US$ as the home currency? (3) (2) By what percentage did the pound change in value? (6 points) (3) Is the pound appreciating or depreciating against the dollar? (3 points) 2. (12 points) The spot rate of Japanese yen is 120.16/$ and the 6-month Japanese yen forward rate is quoted as 128.53/$. (1) Is the yen quoted as a direct quote or indirect quote, assuming the U.S. dollar as home currency? (3 points) (2) Is the 6-month yen selling at a premium or discount? (3 points) (3) What is the annual forward premium or discount on yen against the dollar? (6 points) 3. (16 points) The following was the current account and financial account information (in millions of dollars) for Turkey in 2000 before its currency crisis in 2001. Current Account 31,664 54,041 19,484 Goods Exports Goods Imports Balance of Trade (BOT) Service Exports Service Imports Service Trade Balance Net Income Balance Net Transfers Balance Financial Account 8,149 -4,002 5,225 -112 Net Direct Investment Net Portfolio Investment Net other Investments -1,022 -8,311 (1) What was the balance of Trade? What was the Service Trade Balance? (4') (2) What was the Current Account balance and the main driver in the Current Account? (4) (3) What was the overall balance (ignoring capital account and net errors and omissions)? (4 points) 5 (4) What would be the amount for "Reserves and related items on this BOP? Explain how the foreign reserves for Turkey changed due to central bank intervention in 2000. (4) 4. (12 points) A company in the euro zone exports its machinery to a Mexican company with contract amount of 1,200,000. Assuming the exchange rates are quoted as: $1.2180/ and Ps18.6558/$, (1) what is the cross rate between the euro and the Mexican peso? (6 points) (2) what is the equivalent peso amount due from the Mexican company to the euro zone company? (6 points) 1. (12 points) The pound dropped from $1.54/pound 3 year ago to $1.23/pound recently. (1) Is this a direct quote or indirect quote, assuming the US$ as the home currency? (3) (2) By what percentage did the pound change in value? (6 points) (3) Is the pound appreciating or depreciating against the dollar? (3 points) 2. (12 points) The spot rate of Japanese yen is 120.16/$ and the 6-month Japanese yen forward rate is quoted as 128.53/$. (1) Is the yen quoted as a direct quote or indirect quote, assuming the U.S. dollar as home currency? (3 points) (2) Is the 6-month yen selling at a premium or discount? (3 points) (3) What is the annual forward premium or discount on yen against the dollar? (6 points) 3. (16 points) The following was the current account and financial account information (in millions of dollars) for Turkey in 2000 before its currency crisis in 2001. Current Account 31,664 54,041 19,484 Goods Exports Goods Imports Balance of Trade (BOT) Service Exports Service Imports Service Trade Balance Net Income Balance Net Transfers Balance Financial Account 8,149 -4,002 5,225 -112 Net Direct Investment Net Portfolio Investment Net other Investments -1,022 -8,311 (1) What was the balance of Trade? What was the Service Trade Balance? (4') (2) What was the Current Account balance and the main driver in the Current Account? (4) (3) What was the overall balance (ignoring capital account and net errors and omissions)? (4 points) 5 (4) What would be the amount for "Reserves and related items on this BOP? Explain how the foreign reserves for Turkey changed due to central bank intervention in 2000. (4) 4. (12 points) A company in the euro zone exports its machinery to a Mexican company with contract amount of 1,200,000. Assuming the exchange rates are quoted as: $1.2180/ and Ps18.6558/$, (1) what is the cross rate between the euro and the Mexican peso? (6 points) (2) what is the equivalent peso amount due from the Mexican company to the euro zone company? (6 points)
