Final answer:
The indirect exchange rate from the U.S. perspective for €1.00 = $1.60 is $1 = €0.625, calculated by taking the reciprocal of the direct quote.
Step-by-step explanation:
If the current exchange rate is €1.00 = $1.60, the indirect quote from the U.S. perspective would be how many euros one U.S. dollar can buy. To calculate this, you take the reciprocal of the direct quote. Therefore, the indirect quote would be 1 divided by 1.60, which equals approximately 0.625. So, the indirect quote is $1 = €0.625.
Exchange rates fluctuate and can have significant effects on international trade and investment. For instance, when the euro is strong against the U.S. dollar, it can lead to decreased competitiveness for European exporters, as their goods become more expensive for consumers dealing in dollars. By contrast, a weaker dollar can boost U.S. exports by making them more attractively priced for buyers using stronger currencies.