If the exchange rate moves from 10 Mexican pesos per U.S. dollar to 12 Mexican pesos per U.S. dollar, then the Mexican peso has ________ and the U.S. dollar has ________.

Question

Quizplus · Accepted Answer

Under the new conditions one dollar buys more Mexican pesos than before, so the peso has depreciated and the dollar has appreciated. This shows the reciprocal nature of currency valuation: when one currency depreciates the other currency appreciates against it.

If the Exchange Rate Moves from 10 Mexican Pesos Per