1. Macroeconomics and Its Influence on International Trade.

2. AN EXCHANGE RATE CAN BE CONSIDERED AS A PRICE. WITH A SUPPLY CURVE AND A DEMAND CURVE

3. How are exchange rates quoted? CURRENCIES OVERVIEW 9:23 a.m. EDT 03/31/09 Asia 9:23 a.m. EDT 03/31/09 Europe & Others Last (bid)Prior Day † Last (bid)Prior Day † Australian Dollar (in dollars)0.6940.6797 Euro (in dollars)1.3311.3197 Hong Kong Dollar7.74977.75 Czech Republic Koruna20.50620.929 Indian Rupee50.6451.125 Denmark Krone5.59285.6433 Indonesian Rupiah1153511561 Norwegian Krone6.70536.812 Japanese Yen98.4897.25Polish Zloty3.50713.5791 Malaysian Ringgit3.6433.6523Russian Ruble33.863533.991 Singapore Dollar1.51921.5232 Swedish Krona8.2278.3126 South Korean Won1376.31396.84Swiss Franc1.13771.1486 Taiwanese Dollar33.8734.106 U.K. Pound (in dollars)1.43071.4258 Thai Baht35.4635.587 Egyptian Pound5.63655.6341 † Late Monday in New York.Israeli Shekel4.1844.2052 9:23 a.m. EDT 03/31/09Americas South African Rand9.43029.6993 Last (bid) Prior Day † Get this by E-mail Argentine Peso3.71253.7161 † Late Monday in New York. Brazilian Real2.30022.3305 See Hourly Snapshots | See Full Daily Closing Prices Canadian Dollar1.25781.2617 9:23 a.m. EDT 03/31/09Currency Index Mexican Peso13.99914.3062 LastChg% Chg † Late Monday in New York. US Dollar Index85.26-0.49-0.57

4. Most are quoted in Nations A’s currency in terms of U.S. dollars. P f = P us *k With the Japanese Yen = 98 One $ will purchase 98 yen 98 = 1*98 Or One $ will purchase 14 Mexican Pesos

5. In the case of the British Pound and the Euro the exchange is quoted differently. One Euro = 1.33 dollars One British Pound = 1.45 dollars

6. Euro = Weekly Bar Chart

7. British Pound

8. A bushel of corn say at $4.00 in June 2008 would cost a German Processor 2.5 Euros (1 euro = $1.67) That same $4.00/bushel wheat would cost the German Processor 3.2 Euros in February 2009 (1 euro = $1.26)

9. A 10 Euro bottle of wine would cost an American consumer $16.00 June 2008 That same bottle of wine would cost the American $12.60 in February of 2009

10. FOREIGN INTERESTS (INDIVIDUALS AND BUSINESSES) MUST EXCHANGE THEIR CURRENCY IN ORDER TO MAKE AN INTERNATIONAL TRANSACTION

11. ASSUME TWO COUNTRIES -- FRANCE AND U.S. IF THE FRENCH WANT TO MAKE AND INTERNATIONAL TRANSACTION THEY WILL HAVE TO CONVERT THE EURO TO $

12. THE DEMAND FOR DOLLARS COMES FROM FRENCH PEOPLE WHO WISH TO PURCHASE U.S. GOODS AND SERVICES OR... WANT TO INVEST IN U.S. ASSETS

13. THE SUPPLY OF U.S. DOLLARS COMES FROM FRENCH WHO HAVE SOLD THEIR GOODS, SERVICES OR ASSETS TO AMERICANS

14. Dollar Index Wheat

15. A LITTLE HISTORY: THE BRETTON WOODS AGREEMENT (1945) THE U.S. DOLLAR WAS FIXED RELATIVE TO THE PRICE OF GOLD ( THE GOLD STANDARD)

16. THE RESULT OF THE GOLD STANDARD WAS TO FIX THE EXCHANGE RATES THE CENTRAL BANKS OF EACH COUNTRY WERE RESPONSIBLE TO MAINTAIN THE RATE

17. THE BRETTON WOODS SYSTEM LASTED TO 1973 HIGH INFLATION OUTFLOW OF U.S. DOLLARS FOR OIL THE DOLLARS WAS OVERVALUED AND THE COST OF MAINTAINING WAS HIGH

18. Bond Prices Higher Bond Prices Lower Interest Rates

19. $1 = 8 Yuan 1 Yuan = 12.5 cents $10/bu soybeans cost Chinese buyer 800 Yuan $1 = 7 Yuan 1 Yuan = 14 cents $10/bu soybeans cost Chinese buyer 700 Yuan