Rosario Company’s International Division reported the following results:
The constant currency growth rate for 20X2 represents what the year-over-year sales growth versus 20X1 would have been if exchange rates had not changed from 20X1 to 20X2. Similarly, the constant currency growth rate for 20X1 represents what the year-over-year sales growth versus 20X0 would have been if exchange rates had not changed from 20X0 to 20X1.
Required:
1. In what direction did the values of foreign currencies in countries in which Rosario operates fluctuate, on average, relative to the U.S. dollar from 20X0 to 20X1? Explain.
2. In what direction did the values of foreign currencies in countries in which Rosario operates fluctuate, on average, relative to the U.S. dollar from 20X1 to 20X2? Explain.
