if the euro/$ rate is 1euro/1.27$ is this favorable for european exports or american exports please explain why
2006-10-09 09:07:39 · 4 answers · asked by spuduah12 1 in Business & Finance ➔ Investing
Europeans can get American goods at a cheaper price while Americans have to pay more for European goods. Thus, Americans exports to Europe will rise, while European exports to America will fall. This will create a positive net export balance with Europe (from an American perspective).
This is, of course, all in nominal, not real, terms.
2006-10-09 09:11:24 · answer #1 · answered by I am all that is man 2 · 1⤊ 0⤋
Historically, this rate of $1.27 has been fairly consistent over the past year. However, if you go back to the point when the Euro was first introduced, the exchange rate was approximately $1.08/Euro. Therefore, this does favor american exports as it is cheaper for Europeans to buy U.S. goods than Americans buying Euro goods.
2006-10-09 16:16:42 · answer #2 · answered by Scott F 1 · 0⤊ 0⤋
It depends on what the exchange rate used to be. If one euro used to buy 1 dollar's worth of goods, and now it buys $1.27, then the euro is said to be stronger against the dollar, because you can get more goods than you could before. If one euro used to buy $1.50 worth of goods, then the euro is now weaker than the dollar, because you used to get more for the same amount.
2006-10-09 16:13:17 · answer #3 · answered by Ralfcoder 7 · 0⤊ 0⤋
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2006-10-09 20:58:18 · answer #4 · answered by stock.geek 2 · 0⤊ 0⤋