MGCR 382 Lecture Notes - Lecture 17: Demand Curve, Hong Kong Dollar, Canadian Dollar

• School: McGill University
• Department: Management Core
• Course: MGCR 382
• Professor: Jan J Jorgensen, David S.Schumacher

Document Summary

You are a european firm and you have a supplier in canada that you need to pay in cad. Say, you buy parts worth 1 million cad. You buy in december 2009, it costs you: 1 million cad * 0. 62 eur/cad = 0. 62 million. You buy in july 2010, it costs you: 1 million cad * 0. 8 eur / cad = 0. 8 million eur. This is almost 30% more in a few months. The price of one country"s currency in units of another currency. E. g. on the previous graph: 0. 80 eur / cad. Means that 1 cad buys 0. 8 eur. Likewise, we can invert: 1. 25 cad / eur. Means that 1 eur buys 1. 25 cad. That is the way the financial times writes. Those are peso per dollar, peso per euro, peso per pound. Closing mid = pick a number in the middle between the bid rate/ask rate.