Country x conducts 60% of its trade with country y and 40% of its trade with country z. The initial value of the trade weighted exchange rate index of country x is 100. What will be its new trade weighted exchange rate index value if it's currency falls in value by 20% against the currency of y and rises by 10% against the currency of z?           The answer is apparently 25 according to the answer sheet(mock exam) but I don't understand why? Can someone please help explain this to me?

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Country X conducts 60% of its trade with country Y and 40% of its trade with country Z. The initial value of the trade weighted exchange rate index of country X is 100.

The value of X's currency falls by 20% against the currency of Y and it rises by 10% against the currency of Z.

When the value of X's...

(The entire section contains 152 words.)

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