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HKSI PrepStudyingPaper 1
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EUR/USD rises from 1.0850 to 1.0950. Which of the following statements are correct? I. The euro has appreciated. II. A US dollar buys fewer euros. III. The US dollar has appreciated. IV. A US importer paying a fixed euro invoice needs more dollars.
In EUR/USD the euro is the base currency and the rate is US dollars per euro. A rise from 1.0850 to 1.0950 means each euro now costs more US dollars, so the euro has appreciated (statement I). The inverse, euros per US dollar, falls from about 0.9217 to 0.9132, so a dollar buys fewer euros (statement II). A US importer with a fixed euro invoice must pay more dollars per euro (statement IV). Statement III is wrong: if the euro has strengthened against the dollar, the dollar has weakened against the euro; both cannot appreciate against each other. Source: Standard FX quotation conventions (base currency priced in the terms currency) (as at October 2026).
Reading a rising number as a stronger second currency. A higher EUR/USD means a stronger euro, the base currency.
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