Grade 12 Study Guides T. Holomisa, E. M. J. C schaller, D. J. Brown, B. de Klerk

Some of the effects of a weak currency

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Gr12-Tourism-Study-Guide LR

5. How to interpret a currency rate sheet

Some of the effects of a weak currency

• A weak currency is good for nations that have more exports than imports because their exports will become cheaper for foreign buyers.
• A weak currency will stimulate manufacturing and exports to areas with a stronger currency.
• There will bean increase in manufacturing and job creation if the demand for exports increases.
• More foreign tourists will be able to afford to visit countries with weak currencies as it will increase their purchasing power.
• Imports become more expensive for the countries with weak currencies.
• Higher prices of foreign products increase the cost of living in countries with weak currencies.
• Purchasing power weakens for people in countries with weak currencies.
• A weak currency has a negative effect for people planning to travel to areas with a strong currency. Effects of a strong currency

• Imports become cheaper for the countries with strong currencies.
• Imported products and services, especially fuel, become more affordable.
• Exports become more expensive. Countries with strong currencies will export less as the demand will decrease.
• Domestic manufacturing will decrease as there is less demand from both the domestic and foreign markets.
• Fewer foreign tourists will be able to afford to visit countries with strong currencies as it will decrease their purchasing power.
• Purchasing power strengthens for people in countries with strong currencies.
• A strong currency has a positive effect for people planning to travel to areas with a weak currency.

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5. How to interpret a currency rate sheet

Currency rates, also known as foreign exchange rates or simply exchange rates, tell how much of one currency you need to purchase a unit of another currency. In order to calculate a foreign exchange rate follow these steps
• Identify the exchange rate of the currency you need and find the ISO code. For example, the currency code of the rand is ZAR, while that of the US Dollar is USD.
• Lookup the exchange rate for your two currencies.
• Calculate the exchange rate by looking at a currency pair (two currencies. The first currency in the pair, known as the base currency, is the transaction currency and the second currency is the payment currency.

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