CConomi(S

oject

TOPIC FOREIGN ExCHANGE

NAME OF THE SCHOOL:-S
ST. THOMAS? GIRLS SENIoR SEC. SCHOGL
NAME Of THE STUDENT:SwARA MSHRA
CBSE ROLL NUMBER
ACADEMIC YEAR 2020 1
TEACHER IN CHARGE: MRS. SHALIN CAARAN
ROLedgancl
wauld ee to ezprtss ny gratidude to all tht prople ha
ave helprd ar in th Successful acconplishncat of ny proiect

C8SE
Jistlywauld ike io ezptss ny heartjelt aratitude ta
or providing ne with the opportunity 1o cregte aprosect
that hasenrichrd ny knowledge abaut the topic-tortign Erchans
Raie.

Serondly,1 would likr to thank my principal, Hrs. Anuradha Rmas

or 9iving Mc hr wondehfu suppor and moBivation jor th
Compleiion of this poitc

Jhirdly,1 would lihelo hanh ny lcanomics teachet,Mrs Sralin

(haran for hrr (onsfanl supevisian and guidance during lhe peperotion
of lhis Prourct

a stly,1would libe to lhonk all y teachets,my pareots and

classmates who have heen very Supportive in making this phaect
a Sucess
 Certfcale
hs is ta certiy that Dwara Mishva of S B
St Jhamas 4ils, Senior Secondary School, Handir Haig, New h
has campletrd her phogrc under the guidane o M Shalni
Charan her Cconomics teachtr. Shr has taken proprr ond showvo
utmast Sincerityin the Conple hon ot 1his praeci. 1 trhty
Hhat this procct is upBo my 7pectationsand 1 per 1he
gidelincs1`5ued 6y CBSE
 alemcnl of
purposc

Jhe purpose of he pAo4ect isto visualiae hz cuorking at he

ortianerchange Market and h tactors that gavern it_
ith hehelp oj this _project wt will he aale to grasp he
concepts hehind lhe depreciatian at a currency and understand
how our country has dealt uith i
 TCANADA CAD 8S2 08883
ORC
CHINA
EURO
JAPAN
CNY23 189609 0
EUR 255M
JPY 90002OD
26.189 LANung
SGD3712 2530

ATE
SINGAPORE
HKDR00R3 ASD72
HONG KONG
ZEALAND NZD 98 M0875
NEW MYR E 5 3 5 2 7 9 7 8
auaA
Jnirodudlion
 Currency
echangerate

/unencybeing he driving farcaf hrg ahalcconamynak

tslhaut a daust anesxcalial aleneal tora countty
Hauevee ia ardettarall #hc Cauataitsh dititnent.oetnzics
to irade ilh.onc anathet a.agsteca.atzchang alt setucen thtie
Qrencies isnecded lhus syafen jacmally kncunaatiga
CKchan cutttnexchangc
|da crder to deterniacIhe alue aa aeny erhanar tate he.
hAinypes oSystenvsrd ae

) doating Curtncya wch the exchange taic &

delereinedy the Suply dnd demand o he glabal narhet
wec the supply ancl demand is bound y acta:s sch
As
forcign.tnNestment1o}laBion and atias ajmpartaad
expat Jhis System is adaptad by countries that havra
stasle azkek libe UR, USR ant Canada
50 s 9 i)
isfixd
rg ed.cutzencyin
by the
whch
gaveramcnt
lhe valut ofth: exchangr tate
o)_a countty and nat he
Supply and demand ot he aket. his systtn ia
onnanly uste in Aras cauntics
u]tghtid syslem, in uhich one counlry will tix hair
exchang ate ta the US and ill Constaelly tevicu
htir pgratt
 FOREIGN EXCHANGE

dorcignErchangeteles ta all currengies ofher

than he daneshic currency at a given_caunirg

or Example
dndia's dameskic Cotrency is Indian Rupee
and all other c Urencies likeUS Dalla
Bruhish Paund ehe art tartign Erchang.

342
 DEPRECIATION
URRENCY DEPRECIATION
(orrency epeciatian eicrs to decease
iVolue ot domeshic (urrenty in
iCtmas
o oEign curten cy

JoExamplea rupec ig Said to b

depheciating it_price ot1ises hom
55 to ?o

EFFECTS

&epreciatian of indian Currency ntans tall in priczat

Rupees in lems ot totrign curkenry(Say $
means uih Same amounl o dallas not g aad s
Can bpurchased team india Jhetare exparts to
USA ill 1ácheastas they hccomc relativtly chraper
 Currency Depreciation

Currency Depreciation is the loss in the

exchange value of a country's currency in
comparison to other currency.

WallStreetMojo

Exchange Rate Pound Sterling to Dollar

S 2.05
1.95 Depreciation =Decrease in value of
Currency
1.85
1.75

1.65
1.55
1.45
www
1.35

03-Jan-0603-Jan-0703-Jan-0803-Jan-0903-Jan-10
1.25
03-Jan-1203-Jan-1303-Jan-1403-Jan-1503-Jan-16
www.economicshelp.org | Source: Bank of England -XUDLUSss
 APPRECIATION
CURRENCY HepRECiRTION
Curtency apprcciakion efcrs to Inrcas in Valug
odamtshc cureen.cyin itrns otoEia
Curtn
dar xaaple,
A upee is Said to be appkeciating iprice at
$1 talls_ttocÝko to 55

EFFECTS

Appre ciaBioo af domestiL Currency meansa

PiS in priceo Rupee Nau anc bupee can

bzchangrd formOe dallar uilhsant

amount ananeyas a Yesull, mare 90ods
can b Pukchased tram USA. Jhis leads ta
incEeasein imparksron U5A as they hecomt
Helahively chcape
 Currency Appreciation
A currency appreciation is the rise or enhancement
in the value of a national currency over the values
of international currencies and can be as a result of
the rise in the demand of a domestic currency in an
international market, rise in inflation and interest
rates, due to the flexibility of the fiscal policy or
government borrowing.

2016 2017 2018 2019 2020

WalStreetMojo

Exchange A nse n currexy denand

Rate D1-02) leaxs to an
appreciaian in the
market value

Aporeciation

D1 D2

Quantity
 Effect ofaDevaluation
mports
Become More It can Exports
Become
DEVALUATION
Expensive Cheaper Help GDP
grow
Import Export Current Account
Quantity Quantity Balance of
Decin s Payments Improves
Devaluation rters to rduction iphice af
ation Ageregate Economic Growth
Rises Demand Rises damtshc corty in trms ot all fazin
Improves
orrenty under fizedezchange raBe begine
tabes place due to inttrierence at the
Qautnaent

Efects ofa
CuTency Revaluation

Tre eceaacrs c
Exchangee
rate, E
Ce ar migt cE 0D
s
r g t a the CE
a a e torase R

REVALUATION
gre ard hgrer t
i e nsters to
aC corestc
2Ses Tre
eccrcmy Tay tace

cresse AD anc Y
CuremcicyTA
AA
Output Y

Re valuation teers to
inchease in price of
damestic_rtency in terms oall takeign
Cutenunder piredrehang ate hegim
FIXED EXCHANGE RATE
A ixed exchange rale is akegime applicd
by Countty uhtreby he govetnnent or
catral Ban hies the ofticialerchangr bale fo
anothcrountty's_Cutreny Or he priC o1 9ald
Jn DaSc purpos o
adoping hs Sys te m
S0 nsure Stab lity
fortign excnang:

ialso callrd Peggrd

Frchangt Rate System
 E

S T

S
he
 Exchange rate is fired

O S

50
A C
40

30 3
S
20
10 S D

O Ouantity of Foreign Cumency

FLEXIBLE EXCHANCERATE

lexisle_ezchang tale sysiem eCLS to aSyskn

exchange ale is delermincd y orKes
in which
and supply of dijfrenk Cutrencits
o demand
iorign exchange motket
Jnt value ot
CurrenCy is
allowrd to Tuctuate
treely arcording to chan2
change
demand and sopp
ot toreign exchange.

t is also called 3loating

Echange Rate
Jhere S no 90vernMent

ntervenTion in fore 9n

rchange market
IMANAGED FIOATING RATE

rs to a System1 which torcig zchangt

alr is_determintd hy norkel torcesand central
ank tluences Ih ixchange bate theaugh tervention
10 foreign e7change matket.

Jor his cental bank maintains veserv

of toreign exchang tatt to nsute
hat the zchange katt stays uilhin
the targcted value

1 is a hyhrid.. of ixed izchange

kate and tlezikle exchan9 Eatr
System

i s is also knouwn as diity laating.

 DEMAND FOR FOREIGN EXCHANGE
Jorcign zchange s demandes jarpalaigpatgauta
furchaseol oransaadak dancatir dtais

Byment a attnahian aan

t sand ranls ta tes he u

Invesiment in ralaiiwar
Taurism_ahrcai
Demand tor Jonian Exeangt
Cin Dolla)
 SUPPLY OF FOREIGN EXCHANGE
Supply o oki xchangtdeptnds an Ihc fallawing
aclols
Archase ol dameste aods y oigners

Joveign duect nveslenent tram res of the orld

Speculativtpurchast o foeign xchon
Tourismand Femitlances tkom oeld

vanet o otign exchange by the esidenl

o Counries ahtad
Supply ot,orig erchange
Cin Oallars)
DETERMINATION OF EXCHANGE ROTE
A
T
Exeess Supply

B
SEacess Demond

U
M

Demend end(Dollars)
Supply of Jorrign *honge
chonge
rheng*

Jlexikle ezchangeate is deler.mined he nlersectian o

faces at demaad and supply-
h e quilibtiun ezchange rale is deter.mined ahcre demand
gnd Supply are4gual