Questions for economic reasoning and discussion

1. Has the value of the currency of Ukraine risen or fallen in the past few weeks or months? Do you know why?

2. What events do you expect to affect exchange rates in the next few weeks or months? Why and how?

3. How could you attempt to profit from these changes, if you had a large amount of cash at your disposal?

4. What is the role of commercial banks in the foreign exchange market?

5. What is the most effective way to avoid foreign currency risk exposure? Substantiate your opinion.

Supplementary tasks

Task 1. A. Fill in the gaps with words and word-combinations from the box.

black market	hard currency	pegged
stability	transactions	convertible

A Soft Currency

The Kzarnian florint is not 1_______________ outside the Republic of Kzarnia. Until recently, the official exchange rate was KF20 to the US dollar, although the 2_______________ rate was at least double that. However, last month the government 3_______________ the currency to the dollar at a lower level, and the gap between the official and unofficial rates has narrowed. The official rate currently stands at around KF3 5. Despite the improved 4_______________ of the currency, most major 5_______________ within the country are still carried out in 6_______________. Tourists may never even see a Kzarnian florint, as all goods and services they are likely to require can be paid for in euros or US dollars.

B. Look at the article. Are there following sentences true or false?

1. The Kzarnian florints can be bought in any bureau de change that has them in stock.

2. At the moment, the black market rate is only slightly better than the official rate.

3. KZ florints are mostly used for small everyday transactions.

4. In Kzarnia, you can pay for you hotels, restaurants and taxi drivers in any hard currency.

C. Fill in the gaps with words and word combinations from the box.

cost of living	denominations	Eurozone
legal tender	monetary unit	rounding up

A Hard Currency

The euro is the 1_______________ of the majority of countries within the European Union. Notes come in 2_______________ of 5, 10, 20, 50, 100 and 500 euros. The currency was introduced on 1st January 2002, and shortly afterwards the national currencies of the countries in the 3_______________ ceased to be 4_______________. One effect of the introduction of the euro was "euro inflation", with the 5_______________ rising sharply as a result of the 6_______________ of prices.

D. Choose the correct alternative.

1. When the government doesn't control the exchange rate in any way, the currency is __________.

a. freely convertible b. totally convertible c. absolutely convertible

2. The Japanese yen is trading for less than its usual value. You can talk about __________.

a. a small yen b. a bad yen c. a weak yen

3. The Mexican peso is trading for more than its usual value. You can talk about __________.

a. a big peso b. a good peso c. a strong peso

4. A sovereign is a coin made of 7.3 grams of gold, and is worth a lot of money. However, its __________ is just one pound.

a. front value b. face value c. written value

5. Changes in the values of currencies are called __________.

a. currency fluctuations b. currency alterations c. currency changes

6. An Internet site which does currency calculations based on the latest exchange rates is called a __________.

a. currency changer b. currency converter c. currency setter

7. When you change money, you usually have to pay a __________.

a. commission b. percentage c. fee

8. When changing money, banks tend to offer a _________ exchange rate than bureaus de change.

a. better b. nicer c. fatter

9. Traders sometimes agree to trade currency in the future for an agreed rate. A "long position" means that the trader will make a profit if the currency __________.

a. goes up b. goes down c. stays the same

10. A "short position" means that the trader will make a profit if the currency __________.

a. goes up b. goes down c. stays the same

E. Which two of the following are not a way of saying €1.50?

1. One euro fifty

2. One-and-half-euros

3. One euro fifty cents

4. One euro and fifty cents

5. One point fifty euros

6. One point five euros

7. A euro with fifty

Task 2. Translate the text into Ukrainian.