Download The Power of the US Dollar/Currency Exchange

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Why is money important to trade?
◦ It make trading easier (compared to bartering
system)
◦ It helps people make exchanges
◦ It has an established value that they can store and
use later
◦ It can be used to measure value and relative prices
Students experience how international trade
works by exchanging U.S. dollars for foreign
currencies to make purchases.
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I understand that currencies have different
values and that I can exchange currencies.
Success Criteria…
◦ Identify foreign currencies and give examples
◦ Learn about the power of the U.S. dollar.
◦ Explain why they must exchange currency in order
to trade with other countries.
◦ Explain the role of money in global trade
◦ Conduct transactions using foreign currency
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Do all countries use the same money?
◦ Some European countries do, Belgium, Germany,
Greece, Spain, France, Estonia, Ireland, Italy,
Luxembourg, the Netherlands, Austria, Portugal,
Finland, Cyprus, Malta, Slovenia, and Slovakia are
the 17 members of the EU that use the Euro.
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Which currency do you think is the most
widely traded currency in the world?
◦ The stability of the US dollar has made it the most
widely traded currency in the world.
 It doesn’t lose its value
 The government doesn’t just print more
◦ The second most traded currency in the world is the
Euro, primarily because so many countries use the
Euro.
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Can you name other types of currencies that
people use in the US and other countries?
Country
Currency
Origin of Name
India
Rupee
From the root meaning “Silver”
Russia
Ruble
Means “to cut”
China
RMB or Yuan
Means “the People’s Currency
Peru
Sol
Means “the sun”
Brazil
Real
Means “the Southern Cross
Germany
Euro
Currency now common among European
Union Members
Ghana
Cedi
Means “Cowrie”, which is a type of shell that
was used as currency in parts of Africa
Japan
Yen
Means “round” and originated when
Japanese money changed from being square
to round
England
Pound
A pound of silver
Israel
Shekel
Means “weight”
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Do different currencies have the same value?
What do you need to know about a country’s
money before you make plans to travel to a
country for a vacation or to study abroad?
◦ The value of foreign currency will need to be
compared to the US dollar, because it will determine
how far their money will go in another country.
Currency
US Dollar
Japanese
Yen
Brazilian
Real
Euro
Exchange
Rate
1.0
95.0
2.0
.80
•These exchange rates are approximate and are not necessarily
representative of the current exchange rate. We will use the rates for
our next activity.
•An exchange rate tells the value of one country’s currency in terms of
another. Exchange rates vary considerably between countries and
change often, knowing the current exchange rate is important.
If the dollar is “weak” compared to a foreign currency, will items
purchased in that country be more or less expensive then
those bought at home?
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They will be more expensive because it takes more dollars to
buy that country’s.
They are converters online to help us out.
Approximate rates of exchange of the US dollar against
various world currencies is reported every week in the Wall
Street Journal.
Currency
US Dollar
Japanese Yen
Brazilian Real
Euro
Exchange
Rate
1.0
95.0
2.0
.80
Euro
Travel to foreign countries
where you exchange the US
dollar to see how many goods
and services you can buy
Page 35
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Currency Exchange Game
◦ You will “travel” to foreign countries where you will
exchange US dollars to see how many goods and services
you can purchases using foreign currencies.
◦ Turn to the Currency Exchange Game page in your student
workbook.
◦ You have $200 to spend during a one day trip to each of
the following countries: Mexico, England, China, and Japan.
◦ You must convert your US dollar to the currency of the
country you are visiting.
◦ In each country you must buy as many items as you deem
appropriate given the amount of foreign currency received.
◦ In addition, you need to choose between a hotel and hostel
for your nights lodging. If you have any money left over,
you should convert it back into dollars before leaving the
country, completing the information at the bottom of each
page.
◦ You will be given 10 minutes to complete this
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How do I exchange currency at International
Towne?
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You will get paid in one type of currency (the
currency from the region where you work) but
you will have to exchange your currency to
purchase goods/services from other regions.
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International Towne uses four regional currencies: EuRussia notes,
PacAsia notes, MidAfri notes, and AmeriLat notes.
◦
◦
◦
◦
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EuRussia Notes are used in Italy, Germany, the Netherlands, United Kingdom, and Russia
Egypt, Ghana, and Israel use MidAfri notes.
The Pacific Rim countries of Australia, China, India, Japan, and Singapore use PacAsia notes.
AmeriLat notes are used in Brazil, Canada, and Panama.
To purchase goods, citizens must use the appropriate currency. There
are four regional currency exchange services available in the countries of
Australia, Brazil, Ghana, and Italy.
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Citizens receive their salaries in the currency of their country where they
work.
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Currencies can be exchanged at the International Bank in Singapore at
any time during the day.
The Currency Exchange Table
(passport version) should be
found on the back of your
Passports. The tables will
make exchanging currency
easier, because the math has
already been done for you
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Example:
◦ A citizen works in Canada and receives her salary in
AmeriLat notes. She wishes to buy a pair of sunglasses
from Egypt. To do so, she must exchange her AmeriLat
notes for MidAfri notes.
◦ She finds the table for MidAfri notes on the back of her
passport. The sunglasses cost (15) MidAfri notes, so she
finds the row that lists the price of (15) MidAfri notes
and follows it across until it intersects with the AmeriLat
column. The row and the column intersect at (20)
MidAfri notes. She will need to exchange (20) AmeriLat
notes for the 15 MidAfri notes she will need to buy the
sunglasses
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Tables show the number of notes to exchange
without having to solve an equation.
If you come across a price not listed on the table,
you can still use a calculator and the exchange
rate listed at the top of each column.

How to convert prices
◦ Locate the type of currency you need in the gray
column.
◦ Follow the row across until it intersects with the
currency you have
◦ Enter into your calculator, the number in the box
where the row and column intersect
◦ Multiple this number by the price of the item you
wish to buy
◦ The answer will tell you how much currency you
need to exchange in order to buy the item.
Currency Needed
EuRussia
Notes
PacAsia
Notes
MidAfri
Notes
AmeriLat
Notes
1 EuRussia Note=
1
2
3
4
1 PacAsia Note =
.5
1
1.5
2
1 MidAfri Note =
.33
.66
1
1.33
1 AmeriLat Note =
.25
.50
.75
1
Example:
You work in Ghana and get paid in MidAfri Notes. You want to buy a paper
flower from Mexico. The price is 8 AmeriLat Notes.
Begin by locating the AmeriLat Notes in the currency needed column
Follow the row across until you get to the MidAfri column
.75 X 8 = 6
You will need 6 MidAfri Notes to purchase the flower from Mexico
Continue to practice on pages 39-40
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You should consider the easiest and the fastest way to
make purchases.
Ask yourself:
◦ Is it to go to the International Bank and obtain the correct amount
and type of currency every time you want to buy something, or to
have some of each currency on hand so you always have the kind
you need when youre out shopping? Also, is it wiser to save time,
but spend a bit of money and exchange at a regional currency
exchange office? Or is it easier to use your credit card?
The most frugal, easiest and most efficient way to get
some of each currency is to visit the International Bank
at the beginning of their first travel break.
You should divide your salary currency into four quasiequal sets. (Based on the currency, some students will
need to decide which currency they want more of-since
the denominations will not divide perfectly into four
equal parts). You should keep one set of your country’s
currency and exchange the other three sets for the
other three regional currencies.
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Look at the prices on the four different tables.
What do you notice?
◦ The prices in each country are multiples of a specific
number. Prices in EuRussia notes are multiples of one.
PacAsia prices are multiples of two. Prices in MidAfri
notes are multiples of three. AmeriLat prices are
multiples of four.
◦ All products sold in each country must be based on
these multiple! Otherwise, we would need coins, which
are not available.
◦ For example, if China decided to change the price of
finger traps to 7 PacAsia notes nobody could buy them
because you would be unable to give change. Products
sold in PacAsia must be priced by multiples of 2, the
denomination of the smallest bill in that region.
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You should initially sell your countries products
and cultural activities for the prices listed on your
Projected Revenue and Expenses sheets.
◦ However, if for some reason you need to change prices,
you must set a new price that are the correct multiples
for your country’s currency.
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Finance Ministers will be directed to the
International Bank in Singapore before Towne
opens to pick up their citizen’s salary packets.
You can exchange currency at the International
Bank at any time, but you may also exchange
money at the four regional currency exchange
offices for a small fee. These are located in
Ghana, Italy, Australia, and Brazil.
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A Russian Chef in Russia gets paid (35) EuRussia
notes
◦ Find the last row on the EuRussia Notes table (begins
with the number 9)
◦ Count out salary currency into three sets of (9) notes
each. (This leaves (8) EuRussia notes the Russian Chef
will keep.)
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Exchange the three sets of (9) notes at the
International Bank for (18) PacAsia notes, (27)
MidAfri notes, and (36) AmeriLat notes.
The Russian Chef now has some of each currency
to use when travelling
As you read the scenario, complete the
Currency Log on page 41.
This activity will provide you with solid
practice so you can be ready for your
own travels in International Towne
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When travelling around the world, it is important
to keep track of your expenses, food,
entertainment, and tourist items that they
purchase.
Suddenly running out of money cannot only ruin
a trip, but it can also make it difficult to return
home!! Attempting to keep track of purchases by
memory is not effective.
Turn to the Travelling Around the World page in
your student workbook. Read through the
scenario and complete the currency log on the
next page.
Complete for Homework.
Classwork or homework
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Where did the dollar buy the most? The least?
People and businesses involved in
international trade (importing and exporting)
have to do the same thing that you did in
your “travels.” That is, they must change their
dollars into the currency of the trading
country.
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In international Towne each country will use one
of four regional currencies. Citizens are paid in
the currency of the country where they work. You
must visit the international bank in Singapore to
exchange your currency for that of the other
three regions. Or for a fee you can exchange your
currency in one of the four regional currency
exchange countries. Deciding where to exchange
currency is an example where you need to
understand the Time Value Money as well as
opportunity costs.
International Towne countries must also
exchange currencies when trading with other
countries.