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Forex chapter query

23 October 2013

importer requested remitt 5000 SGD. market rate are as follows 1$=rs. 45.85/45.90 1=$1.7840/1.7850 1=SGD 3.1575/3.1590... i want to learn how the rate will apply from bank point of view. if possible then plz explain clearly in detail

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18 Replies

VISHVESH SHUKLA (NA) (273 Points)
Replied 23 October 2013

Above query where only' 1=' shows then it means 1.= ..so plz reply

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VISHVESH SHUKLA (NA) (273 Points)
Replied 23 October 2013

1= means 1pound...in above query.

deepak (Job) (381 Points)
Replied 23 October 2013

As per my calculation Importer has to pay Rs 129750 to bank to get 5000 SGD, let me know whether I m Correct or wrong

VISHVESH SHUKLA (NA) (273 Points)
Replied 23 October 2013

This is practice module sum.i wnt to know how the rate will apply... Ca final Sum no.35 & page no. 12.45..

deepak (Job) (381 Points)
Replied 23 October 2013

vishvesh you changed the whole question, anyway do you want to know the rate calculation if yes then calcu;ation goes like this On jan28

1. Rs/$= 45.85/45.90

2. $/f= 1.7840/1.7850

3. SGD/f =3.1575/3.1590

By cross rates in 1& 2 we get

4 Rs/f = 45.85*1.7840 / 45.90*1.7850 = 81.7964/81.9315

By Inverse rate in 3 & 4 we get

Rs/SGD = 81.7964/3.1590 / 81.9315/3.1575 = 25.8931/25.9482

The above rate is a bank quote which symbolises that bank will sell 1 SGD for Rs 25.9482 and purchase 1 SGD for Rs 258931 and hence applicable rate is 25.9482, If you have other problem please specify clearly

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VISHVESH SHUKLA (NA) (273 Points)
Replied 24 October 2013

I want to know the procedure that wha.t will buy bank firstly...SGD or $ or Rs. or pound. at what rate from both inter market n international market

deepak (Job) (381 Points)
Replied 24 October 2013

Its not you who will be buying, you have to place your order with your bank, the bank will do transactions in international market if it doesnot have currency you require

VISHVESH SHUKLA (NA) (273 Points)
Replied 24 October 2013

In international market which rate is applicable. Bid or Ask rate. In pound /SGD rate...

deepak (Job) (381 Points)
Replied 24 October 2013

Practically there will be bank quotes for every currency depending on demand supply situation. For exam purpose we will have to calculate the rate by using the standard quotes The International bank/ bank with foregn currency will quote both bid and ask rate for purchase and sale transaction. Here un this q foreign bank is quoting $ /f = 1.7840/1.7850 ie Indian bank will have to sell $ purchasing Pound @ 1.7850. Now the Indian bank has pound it will go to foreign bank quoting SGD/f = 3.1575/3.1590 now the Indian bank will sell f getting SGD rate will be 3.1575

VISHVESH SHUKLA (NA) (273 Points)
Replied 24 October 2013

The SGD/f =3.1575/3.1590, is foreign bank bid n ask rate . So here ind bank buying SGD so foreign bank selling SGD so here Ask rate is not applicable...why.? I m confused about foreign transaction...

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deepak (Job) (381 Points)
Replied 24 October 2013

Look you have to be clear which currency rate is given. I write every rate in terms of denominator ie 1 deno. = so much numera. so when I write SGD/f= 3.1575/3.1590 it is the rate of pound in terms of SGD( you can check every quote of mine)

Now in this Q the foreign bank is quoting SGD/f = 3.1575/3.1590, the rate is of pound. The rate means the foreign bank will purchase 1 Pound for 3.1575 SGD and the foreign bank will sell 1 pound 3.1590 SGD Now Indian bank has pound and want to purchase SGD ie the bank is purchasing pound and the bank is purchasing pound at 3.1575

Sorry I get confused using bid and ask rate hence using buy and sell terms