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Ask the Tutor ACCA AFM

Washi Co Sept 2018

Aannette7y ago
I just read your answer to this here https://opentuition.com/topic/sep-2018-2/ But the problem is. Shouldnt it be like 129.2 JPY= 1 Euro 92.7 ARD= 1euro thus JPY/ARD =129.2/92.7 ? They are both bid rates aren't they? Thanks
John MoffatJohn MoffatTutor7y ago#1
When selling JPY to buy EUR the conversion rate is 132.4. When using EUR to buy ARD the conversion rate is 92.7. Therefore when selling JPY to buy ARD, the rate is 92.7/132.4
Aannette7y ago#2
we have done this because we are going to use the JPY loan to buy euros(sell JPY and buy euros) and then we hypothetically sell those euros to buy ARD for investment into the project? shouldn't we instead be selling ARD to buy JPY instead?( the ARD we have receive from the project sold to purchase JPY that we need to remit to home country Japan) and hence 95.6/129.2?
John MoffatJohn MoffatTutor7y ago#3
No. They are investing JPY for 6 months and then they sell the JPY to buy ARD in order to invest in the project.
Aannette7y ago#4
ok, thankyou. Makes sense! wish there was a systematic way to find exchange rates though.
John MoffatJohn MoffatTutor7y ago#5
You are welcome :-) Have you watched my free lectures on exchange rates?
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