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FOREX query

Sunshine (Helping All) (10575 Points)

06 March 2011

hello...someone please spare 5 minutes and solve it for me.....

Spot rate- Re 1 = SGD 0.0312

3 months forward Re 1 = SGD 0.0310

find out the appreciation or depreciation of SGD.

thanx...

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17 Replies

MOHIT MAHAJAN (LCS, ACA) (2050 Points)
Replied 06 March 2011

In my opinion its like this -

0.0310-0.0312/.0312 = -0.6410%

Hence Rupee has depreciated or SGD has appreciated

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BALASUBRAMANYA B N (CCI STUDENT....) (44687 Points)
Replied 06 March 2011

,...

Sunshine (Helping All) (10575 Points)
Replied 06 March 2011

Originally posted by : MOHIT MAHAJAN
	In my opinion its like this - 0.0310-0.0312/.0312 = -0.6410% Hence Rupee has depreciated or SGD has appreciated

thank u sir but dont u think we need to multiply this with 12/3 months?? and please clarify what denominator u took?

MOHIT MAHAJAN (LCS, ACA) (2050 Points)
Replied 06 March 2011

Yes, if u want to show the appreciation/depreciation rate then it has to be annualised & i've used the old rate as denominator i.e.

Appreciation/depreciation in base currencey = new rate-old rate / old rate

nd i m not sir, just a ca student

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Sunshine (Helping All) (10575 Points)
Replied 06 March 2011

calling u sir coz m just a new entry into finals....

well i asked the question regarding the appreciation or depreciation of SGD...so the base has to be according to it....

thanx fr the answer but m looking for others to solve it plz...i think the base has to be the forward rate if we wanna calculate it for SGD...

just started the chapter so bit confused..

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MOHIT MAHAJAN (LCS, ACA) (2050 Points)
Replied 06 March 2011

Okkk..., i m also not that good in mafa, but i still feel its Fwd rate - spot rate/spot rate, so lets see, u dont hv ans?

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Sunshine (Helping All) (10575 Points)
Replied 06 March 2011

i have the answer but its wrong...in book they just messed up the figures so its incorrect there..

see 1 thing m sure is that...in case of calculations for the right hand currency (SGD) we use (FR-SR)/FR*100*12/m

Sunshine (Helping All) (10575 Points)
Replied 06 March 2011

i wanna check whether m correct or not...!!

stay tuned..it will help us all..these little things make a strong base for us....so i often look for help..!! and CCI provides me the platform..!!

MOHIT MAHAJAN (LCS, ACA) (2050 Points)
Replied 06 March 2011

Well my teacher told that appreciation/depreciation should always be calculated for base currency. If the quest. asks for price currency then first give reply for base and then for price currency as i've first found for rupee then for SGD.

Another option is to make sgd base in both quotes.

MOHIT MAHAJAN (LCS, ACA) (2050 Points)
Replied 06 March 2011

nd plz dont post thanks at my every reply, one is more than enough.

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Sunshine (Helping All) (10575 Points)
Replied 06 March 2011

Originally posted by : MOHIT MAHAJAN
	Well my teacher told that appreciation/depreciation should always be calculated for base currency. If the quest. asks for price currency then first give reply for base and then for price currency as i've first found for rupee then for SGD. Another option is to make sgd base in both quotes.

but the appreciation and depreciation rates will not be same,..!!

MOHIT MAHAJAN (LCS, ACA) (2050 Points)
Replied 06 March 2011

Yes but there would be minor difference nd it is known as "siegel's paradox" nd u can mention it in paper and write same ans for appreciation/depreciation by giving note that u r ignoring effect of siegel's paradox.