28.03.2023 - 06:34

During 1995, the Mexican peso exchange rate rose from 5.33 pesos per U.S. dollar to 7.64 pesos per U.S. dollar. At the same time, U.S. inflation was \approx imately 3% in contrast to Mexican inflation of about 48.7%. Did the Mexican peso appreciate, depreci

Question:

During 1995, the Mexican peso exchange rate rose from 5.33 pesos per U.S. dollar to 7.64 pesos per U.S. dollar. At the same time, U.S. inflation was \approx imately 3% in contrast to Mexican inflation of about 48.7%. Did the Mexican peso appreciate, depreciate, or stay the same in real terms?

Answers (1)
  • Coleen
    April 18, 2023 в 06:01
    The Mexican peso depreciated in real terms during 1995. Real exchange rate is calculated by adjusting the nominal exchange rate for inflation differences between the two countries. Mexican inflation (48.7%) was much higher than U.S. inflation (3%), which means that Mexican goods and services became relatively more expensive than U.S. goods and services. Therefore, the Mexican peso lost its purchasing power in real terms, resulting in a depreciation.
Do you know the answer?
Not sure about the answer?
Find the right answer to the question During 1995, the Mexican peso exchange rate rose from 5.33 pesos per U.S. dollar to 7.64 pesos per U.S. dollar. At the same time, U.S. inflation was \approx imately 3% in contrast to Mexican inflation of about 48.7%. Did the Mexican peso appreciate, depreci by subject Business, and if there is no answer or no one has given the right answer, then use the search and try to find the answer among similar questions.
Search for other answers
New questions in the category: Business
Authorization
*
*

Password generation