Country X trades with only two countries, the USA and Japan.
90% of the country’s trade is with the USA and 10% is with Japan.
The original value of the trade-weighted exchange rate index is 100.
The value of country X’s currency against the US$ rises by 10%. The value of country X’s currency against the Japanese yen rises by 50%.
What will be the value of country X’s new trade-weighted exchange rate index?
114
2 )
115
3 )
130
4 )
160
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