Explanation:
You can think of this as the change in the price of the euro expressed in US dollars. If the exchange rate moved from 1.3500 to 1.2600, then the percentage change in the euro quote is $1.2600 / 1.3500 - 1 = -0.06667(1 / 1.2600) / (1 / 1.3500) - 1 = 1.3500 / 1.2600 - 1 = 0.0714$ or 7.1%.
Q.3579 If the exchange rate quote for the euro (EUR/USD) changes from 1.3500 to 1.2600, then in approximate terms:
A
The euro depreciated by 6.7%, and the dollar appreciated by 7.1%
B
The dollar depreciated by 6.7%, and the euro appreciated by 7.1%
C
The euro appreciated by 10.1%, and the dollar depreciated by 5%
D
The euro depreciated by 5%, and the dollar appreciated by 10.1%
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