If Uganda revalues its shilling by 20 percent and Burundi devalues its franc by 5 percent, the shillings exchange value will appreciate by 25 percent against the franc.

Question

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If Uganda revalues its shilling by 20 percent, the exchange rate between the shilling and franc will change. If Burundi devalues its franc by 5 percent, the exchange rate between the franc and other currencies will change. The net effect is that the shilling will appreciate by 25 percent against the franc, since the shilling is increasing in value while the franc is decreasing in value relative to other currencies.

If Uganda Revalues Its Shilling by 20 Percent and Burundi