Someone please check and correct this

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Depreciation of the Sri Lanka RS. (LKR)What is an exchange rate?An exchange rate is defined as the rate at which one currency is exchanged for another. At present one US $ is equallent to approximately 125 LKR.This means an american tourist visiting Sri Lanka can exchange 1000$ and get 125,000 LKR to spend in Sri Lanka.In international trade for majority of the transactions the United States dollar (US $) which considered as standered currency. The usage of such internationally recognized currency facilitates immensely in foreign trade. In modern world all governments adopts a "slotting exchange rate", when the value of a currency changes daily. It is imported for a country to have a strong currency.How ever the value of the Sri Lankan Rs. (LKR) as gone down over the years this diminishing of the Sri Lankan Rs. (LKR) can be termed as depreciation of currency.The depreciation of the Sri Lankan (LKR) as caused several adverse affects to the economy of Sri Lanka,Firstly the price of imported goods have risen over the years demand inelastic commodities would be imported no matter what the increase in crises. The best example is Oil, where quantity of oil imported as increased annually.In 2010 110 US$ had to paid for an oil barrel, but in 2012 120 US$ was paid.The price of all imported items has increases, this can be describes as "imported inflation." Since oil is an essential commodity the prices of locally manufactured goods and services will also rise leading to a heavy burden on the entire economy.The depreciation of the currency will make export cheaper thus low foreign currency earned.Price of rubber in-terms of foreign currency has decreased, if we try to increase the export price of rubber competitive countries such as India, Malaysia which will supply at a lower cost.There fore we will loose the competitive advantage.Sri Lanka has borrowed a large amount of funds from several countries. Mostly these loans are given in US$ and hence greater amounts of domestic currency has to be utilized in repaying the value of installment including interest rate will be higher as more LKR has to be spend in order to buy foreign currency.A strong consistent exchange rate attracts investors. This is because they can make decisions and predictions regarding investing more accurately. Heavy fluctuations in the LKR has discouraged foreign investors. On the other hand when the Kuwait Dinar (KWD) has increased continuously all the period and hence leading to more foreign investments in to Kuwait.Sri Lanka focus in maintaining a good exchange rate so as to read the advantage of international trade and gain foreign transactions. This will contribute to the development of the country.

Dilshi · Accepted Answer

Please someone check this.. Help me..

Enoon · Answer

I'll do it this once, but I'm afraid you'll turn it in as your own and get us both in trouble. You have to promise me that you'll study my corrections and learn what was wrong with the way you had it. I don't understand the green part well enough to correct it.

What is an exchange rate?

An exchange rate is defined as the rate at which one currency is exchanged for another. At present, one U.S. dollar (USD) is equivalent to approximately 125 Sri Lankan rupees (LKR).
This means an American tourist visiting Sri Lanka can exchange 1000 USD and get 125,000 LKR to spend there.

For most transactions in international trade, the USD is the standard currency. The use of such an internationally recognized currency facilitates foreign trade immensely. In the modern world, all governments have adopted a "sliding exchange rate", under which the value of a currency changes daily. It is important for a country to have a strong currency.
However, the value of the LKR as gone down over the years. This diminishing of the LKR is termed depreciation of currency.

The depreciation of the LKR has had several adverse affects on the economy of Sri Lanka.
For one, the price of imported goods has risen over the years. Demand-inelastic commodities will be imported no matter what the increase in price. The best example is oil. The quantity of oil imported has increased annually.

In 2010, 110 USD had to paid for a barrel of oil, but in 2012, 120 USD was paid.

The price of all imported items has increased, this can be described as "imported inflation." Since oil is an essential commodity, the prices of locally manufactured goods and services will also rise, leading to a heavy burden on the entire economy.

The depreciation of the currency will make exports cheaper and thus reduce foreign currency earned.

The price of rubber in terms of foreign currency has decreased, but if we try to increase the export price of rubber, competing countries such as India and Malaysia will supply it at a lower price.
Therefore, we will lose the competitive advantage.

Sri Lanka has borrowed a large amount of funds from several countries. Mostly, these loans are given in USD, and hence greater amounts of domestic currency have to be utilized in repaying the value of installment including interest rate will be higher as more LKR has to be spend in order to buy foreign currency.

A strong, consistent exchange rate attracts investors. This is because they can make decisions and predictions regarding investing more accurately. Heavy fluctuations in the LKR have discouraged foreign investors. On the other hand, the Kuwait Dinar (KWD) has increased continuously during the same period, leading to more foreign investment in Kuwait.

Sri Lanka must focus on maintaining a good exchange rate so as to reap the advantages of international trade and gain foreign transactions. This will contribute to the development of the country.

Blue Jay · Answer

I tackled this question but problems with my internet connection prevented me from posting my reply. This is what I came up with for the jumbled line.

Mostly these loans are made in USD and hence greater amounts of domestic currency have to be utilized in repaying the loan. The payments, with the accompanying interest, will be higher as more LKR have to be spent in order to buy foreign currency.

Also: In 2010, 110 USD had to be paid for a barrel of oil, but in 2012, 120 USD was paid.

Is it a sliding exchange rate or a floating exchange rate? Do all governments use one?

Dilshi · Answer

Thank you so much teachers.

OK teacher enoon, I promise you that I'll study the places that I was wrong. Teacher Blue Jay has answered for the green jumbled part and it's OK now.
Teacher Blue Jay, I think that I was wrong and it should be a floating exchange rate. And I'm not quite sure that all the governments use one.

Thanks a lot.

Enoon · Answer

I'm sure I missed a few mistakes. If you want to post a revised version, I'll look at it.

Dilshi · Answer

What is an exchange rate?

An exchange rate is defined as the rate at which one currency is exchanged for another. At present, one U.S. dollar (USD) is equivalent to approximately 125 Sri Lankan rupees (LKR).
This means an American tourist visiting Sri Lanka can exchange 1000 USD and get 125,000 LKR to spend there.

For most transactions in international trade, the USD is the standard currency. The use of such an internationally recognized currency facilitates foreign trade immensely. In the modern world, all governments have adopted a "floating exchange rate", under which the value of a currency changes daily. It is important for a country to have a strong currency.

However, the value of the LKR as gone down over the years, this diminishing of the LKR is termed depreciation of currency.

The depreciation of the LKR has had several adverse affects on the economy of Sri Lanka.

For one, the price of imported goods has risen over the years. Demand inelastic commodities will be imported no matter what the increase in price. The best example is oil. The quantity of oil imported has increased annually.

In 2010, 110 USD had to paid for a barrel of oil, but in 2012, 120 USD was paid.

The price of all imported items has increased; this can be described as "imported inflation." Since oil is an essential commodity, the prices of locally manufactured goods and services will also rise, leading to a heavy burden on the entire economy.

The depreciation of the currency will make exports cheaper and thus reduce foreign currency earned. The price of rubber in terms of foreign currency has decreased, but if we try to increase the export price of rubber, competing countries such as India and Malaysia will supply it at a lower price. Therefore, we will lose the competitive advantage.

Sri Lanka has borrowed a large amount of funds from several countries. Mostly these loans are made in USD and hence greater amounts of domestic currency have to be utilized in repaying the loan. The payments, with the accompanying interest, will be higher as more LKR have to be spent in order to buy foreign currency.

A strong, consistent exchange rate attracts investors. This is because they can make decisions and predictions regarding investing more accurately. Heavy fluctuations in the LKR have discouraged foreign investors. On the other hand, the Kuwait Dinar (KWD) has increased continuously during the same period, leading to more foreign investment in Kuwait.

And also, the depreciation of the LKR has affected the balance sheets of domestic companies, because liabilities are denominated in foreign currency while assets are in local currency.

Sri Lanka must focus on maintaining a good exchange rate so as to reap the advantages of international trade and gain foreign transactions. This will contribute to the development of the country.

Dilshi · Answer

Depreciation of the Sri Lankan Rupee (LKR)

What is an exchange rate?

An exchange rate is defined as the rate at which one currency is exchanged for another. At present, one U.S. dollar (USD) is equivalent to approximately 125 Sri Lankan rupees (LKR).
This means an American tourist visiting Sri Lanka can exchange 1000 USD and get 125,000 LKR to spend there.

For most transactions in international trade, the USD is the standard currency. The use of such an internationally recognized currency facilitates foreign trade immensely. In the modern world, all governments have adopted a "floating exchange rate", under which the value of a currency changes daily. It is important for a country to have a strong currency.

However, the value of the LKR as gone down over the years, this diminishing of the LKR is termed depreciation of currency.

The depreciation of the LKR has had several adverse affects on the economy of Sri Lanka.

For one, the price of imported goods has risen over the years. Demand inelastic commodities will be imported no matter what the increase in price. The best example is oil. The quantity of oil imported has increased annually.
In 2009, 60 USD had to paid for a barrel of oil, but in 2011, 90 USD was paid.

Inflation also can cause by foreign currency through GGSS, when considering how it happens, in the time with the depreciation of currency have to spend more local money to take one unit of foreign money when export goods and services. Therefore the price of imported goods and services increase, then because of that the cost of goods and services increase. Finally it affects all over the country. The price of all imported items has increased; this can be described as "Imported inflation." Since oil is an essential commodity, the prices of locally manufactured goods and services will also rise, leading to a heavy burden on the entire economy.

The depreciation of the currency will make exports cheaper and thus reduce foreign currency earned. The price of rubber in terms of foreign currency has decreased, but if we try to increase the export price of rubber, competing countries such as India and Malaysia will supply it at a lower price. Therefore, we will lose the competitive advantage.

Sri Lanka has borrowed a large amount of funds from several countries. Mostly these loans are made in USD and hence greater amounts of domestic currency have to be utilized in repaying the loan. The payments, with the accompanying interest, will be higher as more LKR have to be spent in order to buy foreign currency. As a result it causes a loss in budget.

A strong, consistent exchange rate attracts investors. This is because they can make decisions and predictions regarding investing more accurately. Heavy fluctuations in the LKR have discouraged and risky foreign investors. On the other hand, the Kuwait Dinar (KWD) has increased continuously during the same period, leading to more foreign investment in Kuwait. And also the depreciation of the LKR can harm to the long term and middle term trade transactions and discourage trade too.

More than the above effects as a major scenario; when the currency get depreciate it will directly adverse to the balance trade, because when discourage export of goods and services at a low income for exports, imports and when it take more place have to spend more for imports. Therefore trade balance gets worse to the balance trade. It proves that there is a strong bond between foreign currency and balance trade.

And also, the depreciation of the LKR has affected the balance sheets of domestic companies, because liabilities are denominated in foreign currency while assets are in local currency.

Sri Lanka must focus on maintaining a good exchange rate so as to reap the advantages of international trade and gain foreign transactions. This will contribute to the development of the country.

Enoon · Answer

Depreciation of the Sri Lankan Rupee (LKR)

What is an exchange rate?

An exchange rate is defined as the rate at which one currency is exchanged for another. At present, one U.S. dollar (USD) is equivalent to approximately 125 Sri Lankan rupees (LKR).
This means an American tourist visiting Sri Lanka can exchange 1000 USD and get 125,000 LKR to spend there.

For most transactions in international trade, the USD is the standard currency. The use of such an internationally recognized currency facilitates foreign trade immensely. In the modern world, all governments have adopted a "floating exchange rate", under which the value of a currency changes daily. It is important for a country to have a strong currency. However, the value of the LKR has gone down over the years. This diminishing of the LKR is termed depreciation of currency.

The depreciation of the LKR has had several adverse affects on the economy of Sri Lanka. For one, the price of imported goods has risen over the years. Demand-inelastic commodities will be imported no matter what the increase in price. The best example is oil. The quantity of oil imported has increased annually. In 2009, 60 USD had to paid for a barrel of oil, but in 2011, 90 USD was paid.

Inflation can also be caused by foreign currency through GGSS, when considering how it happens, in the time with the depreciation of currency have to spend more local money to take one unit of foreign money when export goods and services. Therefore, the price of imported goods and services increases, and because of that the cost of domestic goods and services increases. Finally it affects the whole country. The price of all imported items has increased; this can be described as "imported inflation." Since oil is an essential commodity, the prices of locally manufactured goods and services will also rise, leading to a heavy burden on the entire economy.

The depreciation of the currency will make exports cheaper and thus reduce foreign currency earned. The price of rubber in terms of foreign currency has decreased, but if we try to increase the export price of rubber, competing countries such as India and Malaysia will supply it at a lower price. Therefore, we will lose the competitive advantage.

Sri Lanka has borrowed a large amount of funds from several countries. Mostly these loans are made in USD, and hence greater amounts of domestic currency have to be utilized in repaying the loan. The payments, with the accompanying interest, will be higher as more LKR have to be spent in order to buy foreign currency. As a result it causes a loss in budget.

A strong, consistent exchange rate attracts investors. This is because they can make decisions and predictions regarding investing more accurately. Heavy fluctuations in the LKR have discouraged ~~and risky~~ foreign investors. On the other hand, the Kuwait dinar (KWD) has increased continuously during the same period, leading to more foreign investment in Kuwait. And also the depreciation of the LKR can harm to ~~the~~ long-term and middle-term trade transactions and discourage trade too.

More than the above effects as a major scenario; when the currency gets depreciated it will directly affect the balance of trade, because when discourage export of goods and services at a low income for exports, imports and when it take more place have to spend more for imports. Therefore trade balance gets worse to the balance trade. It proves that there is a strong bond between foreign currency and balance trade.

And also, the depreciation of the LKR has affected the balance sheets of domestic companies, because liabilities are denominated in foreign currency while assets are in local currency.

Sri Lanka must focus on maintaining a good exchange rate so as to reap the advantages of international trade and gain foreign transactions. This will contribute to the development of the country.

I do not understand the green parts. Write out the initialism GGSS the first time you use it. I am not sure about "domestic".

Someone please check and correct this

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