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Conversion Apps and Websites These days, currency conversion is an easy task because there are many websites and apps that calculate conversions. In fact, if you use Google, all you need to do is enter the names of the currencies you want to exchange such as “Indian rupee to Columbian peso” in the search bar, and a chart pops up enabling you to enter values to obtain the conversion. Pay Pal is truly a 21st century service. It enables almost anyone anywhere in the world to buy from or sell to anyone else anywhere in the world. The buyer simply selects the currency in which to pay the seller, and the currency conversion is done automatically based on the current exchange rate. Likewise, purchases made overseas with a credit card are automatically converted. Go to Google or Yahoo Finance Currency Converter to demonstrate currency conversion. (Example: Input “Indian rupee to Columbian peso,” or any other combination of currencies.) Thereafter, ask students to volunteer conversion scenarios, such as “How many pesos will I have if I convert $200 USD to Mexican pesos? Explore currency exchange apps, such as Oanda or XECurrency.) FX Rate Changes and Purchasing Power Because exchange rates are free-floating , they constantly fluctuate – though usually in very, very tiny amounts. Exchange rates are watched closely because a change in an exchange rate impacts the purchasing power of the converted currency. That effects the cost of imported or exported goods, and can impact trade and other business between the two countries . For example, if the South Korean won rises in value relative to the dollar, exports from the U.S. to South Korea become less expensive for South Koreans to buy because their currency has increased purchasing power . Many Americans consider that a good thing because it can trigger a demand for U.S.-made goods in Korea, which boosts U.S. employment. On the flip side, the lower value of the dollar makes South Korean goods imported into the U.S. more expensive because the dollar has less purchasing power against the won . You would consider that bad thing if you had your eye on that made-in-South Korea flat screen at Best Buy. Direct students to “Gift Paper Goof” in Chapter 5 of the workbook. Let’s observe how an exchange rate change impacts purchasing power. Read aloud: Gift Paper Goof The Know-It-All has just learned of an unfortunate incident involving Giftmore Giftwrap, a local company that imports beautiful paper from around the world into the U.S. The company's president, Gilda Giftmore, was recently in India shopping for new products. She really liked a colorful hand-painted paper she discovered as she strolled through a local bazaar. She wanted to order 1000 yards of it for her stores. The paper costs 500 INR (Indian Rupees) per yard. While admiring the paper, Gilda whipped out her cell phone and opened her currency converter app such as Oanda or XECurrency. The app automatically applied the current exchange rate. It told her that 500 rupees per yard equals about $7.89 USD per yard, which multiplied by 1000 yards is $7890. Great! Right within her budget of $8000. PRODUCT PREVIEW
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Lesson 5 | Crazy for Currency
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