14 Currency markets 2

14 Currency markets 2


A soft currency

The Kzarnian is not convertible outside the Republic of Kzarnian. Until recently, the official exchange rate was KF20 to the US dollar, although the black market rate was at least double that. However, last month the government pegged the currency to the dollar at a low level, and the gap between the official and unofficial rates has narrowed. The official rate currently stands at around KF35. Despite the improved stability of the currency, most majority transactions within the country are still carried out in hard currency. Tourists may never see a Kazrnian florint, as all goods and services they are likely to require can be paid for in euros or US dollars.


1.      The Karnian florint can be bought in any bureau de change that has them in stock. TRUE/FALSE

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

3.      KZ are mostly used for small everyday transactions. TRUE/FALSE

4.      In Kzarnia, you can pay for your hotels, restaurants and tax drivers in any hard currency. TRUE/FALSE


The euro is the monetary unit of the majority of countries within the European Union. Notes come in denominations 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 Eurozone ceased to be legal tender.

    One effect of the introduction of the euro was “euro inflation”, with the cost of living rising sharply as a result of the rounding up of prices.


1.      When the government does not control the exchange ate 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 alternations        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


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

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