- This topic has 3 replies, 2 voices, and was last updated 4 years ago by
.
- Posts
I’d like to know the methodology behind calculating cross spot rates,
Question in reference is Washi 18
Here JPY/EUR: 129.2-132.4
And ARD/EUR 92.7-95.6We want a spot rate to convert ARD to JPY, so we divide ARD/JPY,
This bit is clear but my question is on what basis is in the question they divided 92.7/132.4 and 95.6/129.2Shouldn’t it be 92.7/129.2 and 95.6/132.4
Regards
No, the answer is correct.
If we want to know the cost of 100 JPY in ARD, then first we would pay for the 100 JPY in Euros and it would cost 100/129.2 Euros.
The cost of buying 1 Euro is 95.6 ARD, and therefore to end up having 100 JPY will cost 100/129.2 x 95.6
Therefore the cross rate for buying JPY is 95.6/129.2 ARD.
Thank you, I guess we have to look out for banks best interest everywhere lol
- The topic ‘Cross spot rate’ is closed to new replies.