In 2015 one barrel of Brent oil traded for GBP 42.5 and South Africa rands (ZAR) 790. What is the exchange rate between the pound and the rand? How would the exchange rate change if the oil price jumps to GBP 50/barrel (assume no change in the price in S. Africa)?
In 2015 one barrel of Brent oil traded for GBP 42.5 and South Africa rands (ZAR) 790. What is the exchange rate between the pound and the rand? How would the exchange rate change if the oil price jumps to GBP 50/barrel (assume no change in the price in S. Africa)?
Chapter1: Making Economics Decisions
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2. In 2015 one barrel of Brent oil traded for GBP 42.5 and South Africa rands (ZAR) 790. What is the
exchange rate between the pound and the rand? How would the exchange rate change if the oil
Transcribed Image Text:.... Or if expressed as FRF/GBP
2. In 2015 one barrel of Brent oil traded for GBP 42.5 and South Africa rands (ZAR) 790. What is the
exchange rate between the pound and the rand? How would the exchange rate change if the oil
price jumps to GBP 50/barrel (assume no change in the price in S. Africa)?
Assumptions
Price of an ounce of gold in GBP (£/barrel)
Price of an ounce of gold in S. African rands
(ZAR/barrel)
What is the implied £/ZAR exchange rate?
(GBP price of an ounce / ZAR price of an ounce)
Brent Oil
Values
£42.50
ZAR 790.00
What If
£50.00
ZAR 790.00
Transcribed Image Text:.... Or if expressed as FRF/GBP
2. In 2015 one barrel of Brent oil traded for GBP 42.5 and South Africa rands (ZAR) 790. What is the
exchange rate between the pound and the rand? How would the exchange rate change if the oil
price jumps to GBP 50/barrel (assume no change in the price in S. Africa)?
Assumptions
Price of an ounce of gold in GBP (£/barrel)
Price of an ounce of gold in S. African rands
(ZAR/barrel)
What is the implied £/ZAR exchange rate?
(GBP price of an ounce / ZAR price of an ounce)
Brent Oil
Values
£42.50
ZAR 790.00
What If
£50.00
ZAR 790.00
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