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Currency Problem

Forums › ACCA Forums › ACCA FM Financial Management Forums › Currency Problem

  • This topic has 1 reply, 2 voices, and was last updated 14 years ago by bridmw.
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  • Author
    Posts
  • October 28, 2010 at 10:00 am #45722
    Anonymous
    Inactive
    • Topics: 9
    • Replies: 16
    • ☆

    i m having this problem.. whenever currency rate is given and along with it “+/-” deviation is given how do i know whether and when to deduct the deviation or to add it to the rate?
    for example
    spot rate = 1.5 “+/-0.004”
    the rate to be used for calculation will be?
    1.5-0.004=1.496
    1.5+0.004= 1.504
    ?

    October 28, 2010 at 12:21 pm #69890
    bridmw
    Member
    • Topics: 5
    • Replies: 132
    • ☆☆

    It depends on whether the currency is being bought or sold. The bank sells to the buyer at the higher rate in this case 1.504 but buys from a seller at the lower rate of 1.496. The spread 0.008 is how the bank makes their money.

    Hope this helps clarify.

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