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Hello sir.
Your lectures are a great help.
I’ve a small confusion regarding forex.
When we are paying in a currency, we will always pay at the lower rate and when we are receiving a currency, it will always be at the higher rate . Is that statement correct?
Thats how i used to remember that we will always receive less at the higher rate and we will always pay more at the lower rate,
However, i attempted a few examples and in both receving and selling, we used the higher rate.
Please guide me.Thank you.
No – your statement is not correct. It depends which way round the currency is quote.
I do go through the ‘rule’ at the start of the first lecture on foreign exchange risk management.
However appreciate that you always use the rate that is ‘worst’ for the company (because it is the bank who make the profit – so whichever makes any payment the highest or any receipt the lowest.
If you are having problem with any of our examples, or any examples in the current edition of the BPP Revision Kit, or any past exam questions, then say which one and I will explain.
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