Currency Exchanges as part of Supply and Demand

Terms and Concepts to Cover:

Prices of Currencies (labels on the Y axis)
Quantities of Currencies for International Trade and Investments
Currency Appreciation- goes up in value
Currency Depreciation- goes down in value
Exports are Money Inflows and a positive for a country
Imports are Money Outflows and a negative for a country
Determinants of Currency Flows
Whats the value of currency? Government/everyone said so.

Currencies as part of Supply and Demand

All major currencies of the world float on supply and demand markets.
Some minor currencies are pegged to other major currencies like the US
dollar and the Euro, but rise and fall in value with those major currencies.
The only major currency that is fixed in exchange rates by governmental
decree is the Peoples Republic of Chinas Yuan. The Chinese government
does adjust the fixed rate occasionally, most recently as a response to US
pressure to balance trade issue flaws.
Currencies either appreciate or depreciate in EP.
When changes occur between two countries economies, the currencies will reflect
those changes:
Always change the D line on one currency graph, the S line on the other
currencys graph.
One currency will appreciate, the other will depreciate.
Move the lines of the two currency graphs the same direction and you
will end up with the correct answer.
How do currencies move?
Fads, tastes, and political actions like boycotts, occur in a country as it deals
with another country.
The country with less inflation has the more attractive economy compared to
a trading partner.
The country with better investment opportunities (higher real interest rates
for investments) has the more attractive economy.
The country expected to improve its economic standing more quickly than
trading partners will have the more attractive economy.
If the overall real wealth of one country improves, compared to the wealth of
a trading partner, the improving country will have the more attractive
economy.

Currency Exchanges (Currencies as S and D Markets)

Graph both currencies.
Label them as either appreciating or depreciating in value.
Tell what happens to US Exports after the change.
1. US $ and the Mexican Peso (M$):
Drug wars in Mexico cause US tourists to stay away from Mexico.
2. US $ and the Euro ():
US goes into deep recession, Europe does not.
3. US $ and the Japanese Yen ():
Japanese game companies bring out hugely popular new game systems.
4. US $ and the Chinese Yuan (C or
):
China decides to reduce sales of rare earth minerals to the US.
(Assume that the Yuan trades on S and D markets.)
5. US $ and the Canadian Dollar (C$)
After the Calgary Winter Olympic Games, Canada becomes a favorite US
tourist destination.
6. US $ and the Chilean Peso (CLP$):
The two countries sign a trade agreement that dramatically increases the
food Chile will export to the US during the winter in the northern
hemisphere.
7. US $ and the Euro ():
Gasoline prices spike to $10.00 a gallon worldwide and German car
companies introduce several models of cars that get 75 miles per gallon in
efficiency.
8. US $ and the Australian Dollar (A$):
After massive flooding in Australia, the US decides to send billions in aid
money to Australia.
9. US $ and the Russian Ruble ( R ):
Russians decide that US cars are extremely fashionable to own.
10.US $ and the Nigerian Naira ( N ):
The US increases investments in newly discovered oil fields in Nigeria.