Question
Assume the Bank of Germany borrowed Australian dollar (A$) 25 billion from the Bank of Australia before the global financial crisis of 2007. At that
Assume the Bank of Germany borrowed Australian dollar (A$) 25 billion from the Bank of Australia before the global financial crisis of 2007. At that time, the rate was A$ 1.68751/ or US$1.4786 /. In 2012, the Bank of Australia repaid the money borrowed. At the time of repayment, the rate was A$1.22829/ or US$ 1.25929/:
A. Calculate the percentage of devaluation of euros against Australian dollars as well as euros against U.S. dollars.
B. Calculate the cost of intervention to the Bank of Germany in euros and U.S. dollars. (Briefly show or explain how you arrived at your solutions)
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