Sir in foreign exchange risk questions how we will decide whether to multiply or divide the foreign currency for total payments
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Foreign Exchange Risk Management
20d ago#1To decide whether to multiply or divide, look at whether you are starting with the base currency (the first currency in the pair) or the quote currency (the second currency)
The general rule is:
From the Base, Multiply
To the Base, Divide
20d ago#2Again,
Look at the exchange rate
Find the base currency
The currency listed first is the base currency, it’s value is always treated as 1.
The second currency is the quote (or terms) currency, which tells you how much of it is required to buy 1 unit of the base.
If converting from the base currency then Multiply.
If converting to the base currency then Divide.
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