Question

If the French euro devalued by 17% against the U.S. dollar, this is equivalent to a revaluation of the dollar against the euro by:________.A) 17%B) 16.31%C) 20.48%D) 17.54%

Answer 1

Answer:

C) 20.48%

Explanation:

I will use an example to show this:

1€ = $1

if the euro depreciates by 17%, then the exchange rate will be 0.83€ = $1

in order for the euro to recover its previous value against the dollar, it needs to increase 0.17€ / 0.83€ = 0.2048 = 20.48%

in other words, a 17% depreciation is equivalent to a 20.48% revaluation.