The exchange rate of 10$ = 850 Rwandan Francs (RWF) means that 1$ is equivalent to 85 RWF. If the Rwandan Franc devalues by 20%, the new exchange rate would be 10$ = 680 RWF, which means that 1$ is now equivalent to 68 RWF.
Calculating the Devaluation:
In order to calculate the devaluation, we need to first understand the concept of devaluation. Devaluation is a decrease in the value of a currency in a fixed exchange rate system, or when there is direct government intervention in the foreign exchange market. This decrease in value means that, for a given amount of money, fewer units of the other currency can be bought.
Impact of Devaluation:
The impact of devaluation is that it makes imports more expensive, as the cost of foreign currency is increased. This can lead to an increase in the cost of living, as imported goods become more expensive. It also makes exports more competitive, as the cost of the domestic currency is decreased.
Calculating the Exchange Rate:
To calculate the devaluation of the Rwandan Franc (RWF), we need to know the original exchange rate and the new exchange rate. The original exchange rate was 10$ = 850 RWF, and the new exchange rate, after the 20% devaluation, is 10$ = 680 RWF. This means that the 1$ is now equivalent to 68 RWF, instead of 85 RWF.
- What is the definition of devaluation?
- What is the impact of devaluation?
- What is an example of devaluation?
- What is the difference between devaluation and depreciation?
- What is the impact of devaluation on imports?
- What is the impact of devaluation on exports?
- How is the exchange rate calculated?
- What is the original exchange rate of 10$=850rwf?
- What is the new exchange rate after the 20% devaluation?
- What is the equivalent of 1$ after the 20% devaluation of the Rwandan Franc?