Forex problem

Page no : 2

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 21 June 2014

there is another trick to solve these queries.

Always talk with respect to Unit currency.

In the above question the US firm has Euro and he needs US $ so as per qoute unit currency is $ so lets talk Wrt $ ...$ requires to be purchassed and as we know it cna be purchased at market selling rate i.e ask rate so relevant rate is 0.800 per $

so final the us firm get = 120000/0.800 =150000$ ans.

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CA Suryakant Dubey (CA ) (931 Points)
Replied 21 June 2014

iNDIRECT QUOTE....sELLING nUMERATOR, Buying Denominatorr Ask rate applicable,sINCE Dollar is inferior hence division,120000/0.800=150000,Assume foreign currency as a commodity, assume 1$=Rs.48 then assumimg 1$ as a commodity for buying it you have to pay Rs.48..Might this way will make you simplier...

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 21 June 2014

Bank Quotes the BID Rate and ASK Rate. Bid rate means bank will purchase from customer and Ask rate means bank will sell to customer. So to solve the problem think as Bank's point of view. And then if you have to purchase then means bank will sell to you so consider the ask rate quoted. similarly if you have to sell then means bank will purchase from you so consider the bid rate quoted by bank.

KIRIT VARIYA (Future Chartered Account (FCA)) (47 Points)
Replied 21 June 2014

For better understanding view the video SSForex-1part 1on youtubef sanjay saraf sir.

Ayush Agarwal (audit assisstant) (45 Points)
Replied 22 June 2014

While doing forex problem just remember these points Always assume yourself as quote taker i. e. Take unfavorable rates if question is silent Jis currency ki rate 1 unit mai quote hai always see that whether that currency is being purchased or sold For eg. 1$=rs.60 then see what happens to $ (buy or sell) & accordingly use bid ask rates.

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Archana (--) (29 Points)
Replied 22 June 2014

Try to remember this way :- if bank has to sell us dollar it will take more of rupees from us and if bank has to sell rupees it will give us less of it.. (in simple words if we go to buy a chocolate shopkeeper will take more money, and if we go to sell chocolates he will buy it for less money) a normal trading concept.. now the rates are quoted as bid/ask which is in low high style , I.e. low is for purchase and high is for sell... another way of remembering thisis ask has 's' in it that is for bank selling rate and the other one is purchase rate...and always do the question from bank point of view.. I hope these things help you..

Ayush Chaplot (CA-Final CS-Executive B.com-III yr.) (37 Points)
Replied 22 June 2014

Always assume yourself to be a quote taker. Ans to yr query is 150000$

Prosanta Chaki (CA Final So many books 📚 has little time.!) (264 Points)
Replied 22 June 2014

Bank always given to customer lower amount. ...

peeyush (working) (506 Points)
Replied 23 June 2014

While doing forex sums u have to think from the bank point of view.for example if the customer wants to buy foreign currency we will interpret as bank is selling foreign currency .thus we will take the highest of the quote

Minesh Rawat (Article) (199 Points)
Replied 02 July 2014

Hi niharika Think customer view point suppose u purchase foreign currency then u hv to pay more home currency and if u sell foreign currency then u gonna receive less home currency for d same....reverse in case of bank's virw point....Hope dis clear ur concept....n if u hv any doubt in forex then feel free to ask as I m d master of forex n even fm too....