478 Chapter 11 International Business
Here, the exchange rate means:
C$1 US$0.85
Using the same sort of mathematics as in the previous example, we can determine that the
cost in Canadian dollars would be C$89.34.
It is not possible to draw any general conclusions about the exchange rates offered by merchants
on purchases. It is reasonable to expect that retailers would offer rates that are less attractive
than the published rates for the same reasons that retail currency exchanges do, and this is
generally true. On the other hand, though, businesses trying to attract tourists sometimes offer
exchange rates for purchases that are considerably better than the published rates. Some Amer-
ican hotels, for example, offer to accept Canadian funds at par, which means C$1 US$1, to
attract the business of Canadian tourists.^4 Exchange rates offered by businesses can offer a big
cost advantage (or disadvantage) to customers paying in one currency or the other.
EXERCISES 11.1
Except where another rate is provided in the problem, use the tables on pages 469–470 in answering the following questions.
Use the more recent rate except where told to do otherwise.
A. Converting from U.S. to Foreign Currency
- What is the value of 1 U.S. dollar in each of the following currencies?
a. British (U.K.) pound
b. Saudi riyal
c. Mexican peso
d. Thai baht
e. Brazilian real
- Convert $590 into the currency of each of the following countries:
a. Kuwait
b. Turkey
c. Argentina
d. Malaysia
e. Ecuador
- Convert each of the following amounts from U.S. dollars to the specifi ed foreign currency:
a. $20,000 into euros
b. $550 into Australian dollars
c. $8,735 into South African rand
d. $37.62 into Indian rupees
e. $54,769.25 into Russian rubles
(^4) Someone paying in U.S. dollars might be able to negotiate a better room rate, though.