Questions
1. How much rand revenue per ounce was Harmony generating on September 11, 2001? Three years later?
2. The average exchange rate during 2001:Q2 was R8.04/$; in 2004:Q2, it was R6.60/$. Compare Harmony’s earnings per ounce in rand terms during 2001:Q2 with the same figure in 2004:Q2.
3. Given the exchange rates in question 2, by how much would Harmony have to reduce its rand costs per ounce in 2004:Q2 in order to make the same rand profit per ounce it was earning in 2001:Q2?
2 A falling dollar meant that Asian exporters to the United States had to either raise their dollar prices to maintain margins or accept lower revenues when converted into their home currencies. An added problem was that the costs of their Chinese competitors were denominated in yuan and when the dollar declined a yuan fixed to the dollar also fell in equal measure against other Asian currencies. At the same time, a yuan tied to the dollar meant that U.S. manufacturers competing with Chinese firms got less of a boost from a falling dollar. As noted in Chapter 2, since 2005 the yuan has been less closely aligned with the dollar.