percentage adjustments on the Corporate Lobby page, on pertinent decision screens, and in the company
reports. While you do not have to master the details of how the two types of exchange rate adjustments
are calculated, you definitely will need to keep a watchful eye on the sizes of the exchange rate
adjustments each year and understand what you can do to mitigate the adverse impacts and take
advantage of the positive impacts of shifting exchange rates on your company’s financial
performance.
The sizes of the exchange rate adjustment each year are always equal to 5 times the actual period-to period
percentage change in the real-world exchange rates for US$, €, Brazilian real, and Sing$
(multiplying the actual % change by 5 is done so as to translate exchange rate changes over the few days
between decision periods into changes that are more representative of a potential full-year change).
However, because actual exchange rate fluctuations are occasionally quite volatile over a several day
period, the maximum exchange rate adjustment during any one period is capped at ±20% (even though
bigger changes over a 12-month period are fairly common in the real world).
There will be no exchange rate adjustments in Year 11. The real-world exchange rate values prevailing
at the time your instructor re-starts the industry after any practice decisions and the real-world rates
prevailing at the time of the decision deadline for Year 11 will serve as the base for calculating the Year 12
exchange rate adjustments. The real-world changes in the exchange rates between the Year 11 and Year
12 decision deadlines serve as the basis for exchange rate adjustments in Year 13. And so on through the
exercise. This means you have the advantage of knowing in advance what the exchange rate effects will
be in the upcoming year and can thus take actions to mitigate adverse exchange rate effects (we have
done this to help you manage the risks of exchange rate fluctuations as opposed to giving you the option to
engage in currency hedging, which is pretty intricate and has risks of its own).