TFFE 99th Banking Professional Exam: Math Solution

(10) Suppose you want to purchase EURO 65,000 to make a payment on behalf of your importer. Please calculate the buying and selling exchange rate using the following Forex market data, and also calculate the amount of BDT you have to pay for purchasing EURO 65,000? Interbank foreign exchange rate :

EURO 1 = USD 1·0978—1·1158, USD 1 = BDT 117·5854—118·6476

(Please show your calculation).

Solution:

Step 1: Calculate Cross Buying Rate

For the cross buying rate, we use the lower rates:

Cross Buying Rate= 1.0978 × 117.5854= BDT 129.0853 per EUR

Step 2: Calculate Cross Selling Rate

For the cross-selling rate, we use the higher rates:

Cross Selling Rate = 1.1158 × 118.6476 = BDT 132.3870 per EUR

Step 3: Calculate BDT Required

The importer is purchasing EUR from the bank. Therefore, the selling rate of the bank will apply.

BDT required= EUR 65,000 × BDT 132.3870 = BDT 86,05,155

Answer

Buying Rate = BDT 129.0853 per EUR

Selling Rate = BDT 132.3870 per EUR

BDT required for EUR 65,000 = BDT 86,05,155

No profit margin, commission, or other charges are considered because none are given in the question.