Question

A year ago, you observed that the Euro (EUR) was valued at 1.10 USD while the Australian Dollar (AUD) was valued at 0.7463 US Dollars (USD). Today, the EUR is valued at 1.09 USD, and the AUD is worth 0.6706 USD. Determine the change in the value of the AUD against the EUR (that is, AUD/EUR) as a percentage over the last year.

Answer 1

The value of the Australian Dollar (AUD) against the Euro (EUR) has decreased by approximately 9.32% over the last year.

Step-by-step explanation:

To calculate the percentage change in the value of the Australian Dollar (AUD) against the Euro (EUR) over the last year, we must first determine the exchange rates of AUD to EUR at the two different points in time. A year ago, the exchange rate was calculated by dividing the value of the AUD by the value of the EUR (0.7463 USD / 1.10 USD = 0.6785 AUD/EUR). Currently, the exchange rate is 0.6706 USD / 1.09 USD = 0.6152 AUD/EUR.

Next, we calculate the percentage change using the formula: ((New Rate - Old Rate) / Old Rate) * 100. This results in ((0.6152 - 0.6785) / 0.6785) * 100, which is approximately -9.32%. Therefore, the value of the AUD against the EUR has decreased by approximately 9.32% over the last year.

This calculation is essential for businesses dealing in international trade, such as a French firm selling goods in the United States. A stronger or weaker currency can significantly impact their profits when converting sales revenue back into their domestic currency.