If the Australian dollar devalues against the Japanese yen by 10%,the yen will appreciate by
A)33.32%
B)25.55%
C)10.11%
D)11.11%

Question

Quizplus · Accepted Answer

When a currency devalues by a certain percentage, the reciprocal currency appreciates by a different percentage. The formula to calculate the appreciation rate is: Appreciation Rate = (1 / (1 - Devaluation Rate)) - 1. For a 10% devaluation, this becomes: (1 / (1 - 0.10)) - 1 = 1.1111 - 1 = 0.1111 or 11.11%.

If the Australian Dollar Devalues Against the Japanese Yen by 10%,the