Cruxellaneous

An unusual currency development you should keep an eye on

cruxellaneous-3
From Bruce Krasting:
 
Say you're a Doc, working out of NYU Hospital on 1st and 34th, and on October 29, you park your car in the lot next door. Sandy rolls in, and the next morning your car is 20 feet underwater. You've got insurance, so a week later, check in hand, you look at new cars and narrow it down to two. A decked out Lexus LS460 and very nice Audi A8. The walk out price on both cars comes to 8o grand. Which one do you choose?
 
That was just three months ago. At that time, the relative value of these cars was equal. If you assume that 80% of the cost of the car was the imported value, then you were "paying" 50,394 Euros for the Audi and 5,12o,000 Yen for the Lexus. At the exchange rates in early November, the Euro component of the Audi was $64,000 (80,000 X 80% X EURUSD 1.27). The Yen cost was also $64,000 (80,000 X 80% /80.00). The EURJPY exchange rate was 102.
 
Today, the EURJPY FX rate is 1.2650. The dollar cost of those Euros and Yen have changed substantially. $68,900 is now the Euro component of the Audi (+3,900). The dollar cost of the imported Lexus has fallen to $55,350 (-$8,649). Looking at just the FX rate changes, the cost of the Lexus is down...
 
 
More on currencies:
 
 
 
Post your comment...