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Dear Sir,
Please how do we do to identify the base & counter currency in the PPT formula?
How do we also do to identify the Ic & Ib in the IRPT formula?
It depends how the exchange rate is quoted. The base currency (for both formulae) is the one being quoted against.
So….if the exchange rate is $/€ 1.20 (i.e. $1.2 = €1) then € is the base currency.
If the exchange rate is €/GBP 1.50 (i.e. €1.50 = 1GBP) then GBP is the base currency.
I do suggest that you watch my free lectures on this where I explain, with examples.
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