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