Question 1 Page 1

Exchange Rate for Dollar is as follows: Rs. 75 for one Dollar

You want to purchase currency, 3000 Dollar units as you are going abroad.
Show how many units of currency Rupees is necessary for the same.

Question 2
Exchange Rate for Euro is as follows: Rs. 95 for one Euro
You want to purchase currency Euro 9.99 to pay for a software online.
Show how many units of currency Rupees is necessary for the same.

Question 3
Exchange Rate for Dollar is as follows: Rs. 80.00 for 1 Dollar
You are an exporter who earned 2500 Dollar by sending your goods to USA
Now you wish to convert the available Dollar into Rupees.
Show how many units of currency Rupees you will get on such conversion.

Question 4
Exchange Rate for one Pound is as follows: Rs. 105 for 1 Pound
You are an importer who want 500 Pounds to remit it to your supplier in UK
Now you wish to convert the available Rupees into Pounds
Show how many units of currency Rupees you will get on such conversion.

Question 5
Exchange Rate for one Rupee is as follows: £ 0.0095 for 1 Rupee
You are an importer who want 8,000 Pounds to remit it to your supplier in UK
Now you wish to convert the available Rupees into Pounds
Show how many units of currency Rupees you will get on such conversion.

Question 6
Exchange Rate for one Rupee is as follows: $ 0.0134 for one Rupee
You want to purchase currency, 3000 Dollar units as you are going abroad.
Show how many units of currency Rupees is necessary for the same.

Question 7 Bid Ask

Exchange rate at Counter of HDFC bank is Rs. 100.08 / Rs. 100.85 for a British Pound
Bid is the rate where the Bank will purchase 1 Pound from you and will pay the bid rupees
Ask is the rate where the Bank will sell 1 Pound to you and you have to pay the ask rupees
You are an importer.
You wish to import Raw Materials worth 8000 Pounds from a supplier in UK
How many Rupees you should pay for the same ?

Question 8 Bid Ask

Exchange rate at Counter of HDFC bank is Rs. 74.5/ Rs. 75.6 for a US Dollar
Bid is the rate where the Bank will purchase 1 USD from you and will pay the bid rupees
Ask is the rate where the Bank will sell 1 USD to you and you have to pay the ask rupees
You are an exporter
You are in possession of $ 3,250 by exporting your product to USA
How many Rupees you will get for the same ?

Question 9 Bid Ask

Exchange rate at Counter of ICICI bank is Rs. 100/ Rs. 102 for a British Pound
It means when you are going to Sell 1 Pound bank will pay you : Rs. 100
and when you are going to purchase 1 Pound bank will charge you : Rs. 102 102 : 1 Pound
You have Rs. 10 Lakh with you, which you want to convert into Pounds.
How may Pounds you will get ? Vikrant Kelkar: Basics of Forex
 Page 2
Question 10 Bid Ask
Exchange rate at Counter of ICICI bank is £ £ 0.009 £ 0.00965 for a one INR
You have Rs. 10 Lakh with you, which you want to convert into Pounds.
How may Pounds you will get ?

Question 11 Bid Ask

Exchange rate at Counter of SBI is ₹/$ ₹ 74 ₹ 75 for a US Dollar $
Exchange rate at Counter of SBI is ₹/£ ₹ 101 ₹ 103 for a GBP £
Bid is the rate where the Bank will purchase 1 USD GBP from you and will pay the bid rupees
Ask is the rate where the Bank will sell 1 USD or GBP to you and you have to pay the ask rupees
a. Computation of Inverse Quote
i. How many $ you will get by Selling ₹1
ii. How many $ are necessary to buy ₹ 1
iii. Show the Bid / Ask rate for $ into ₹ ($/₹ Quote)
iv. Similarly show inverse quote for £/₹ transaction.

b. You are in the Business of Import and Export

You are expecting receipt of $ 5,000 from a customer in USA tomorrow.
And you have to pay GB Pounds to a supplier in UK in next week.
You have decided following steps :
i. First convert the export receipts in $ into ₹
ii. Convert available ₹ into £
Find out how much Pounds you will get in the end.

Note: For both a. and b. conversion should be based on following principal

For all computations first 4 decimals are to be considered with rounding based on 5th decimal.
e.g. 1.245378 should be taken at 1.2454 and 84.952647 should be taken at 84.9526

Question 12 Bid Ask

Exchange rate at Counter of HDFC bank is ₹ 76.80 ₹ 77.70 for a US Dollar $
Exchange rate at Counter of HDFC bank is ₹ 101.40 ₹ 103.10 for a GBP £
Bid is the rate where the Bank will purchase 1 USD GBP from you and will pay the bid rupees
Ask is the rate where the Bank will sell 1 USD or GBP to you and you have to pay the ask rupees
You are in Business of Import and Export
You are having £ 3,600 in your account earned from earlier export transaction.
And you have to pay $ to a supplier in USA.
You have decided following steps :
i. First convert the export receipts in £ into ₹
ii. Convert available ₹ into $
Find out how much $ you will get in the end.
Question 13
Exchange rate at Counter of Authorized Dealer (A.D.) is ₹ 84.25/95 for one Euro €
It means the quote is ₹ 84.25 as Bid Price and ₹ 84.95 as Ask Price for one Euro €
Exchange rate at Counter of Authorized Dealer (A.D.) is ₹ 104.80/65 for one Pound £
It means the quote is ₹ 104.80 as Bid Price and ₹ 105.65 as Ask Price for one Pound
You are in the Business of Import and Export
You are having € 10,000 in your account earned from earlier export transaction.
And you have to pay £ 10,000 to a supplier in UK
You have decided following steps :
i. First convert the export receipts in € into ₹
ii. Convert available ₹ into £
iii. Check available £ and find out deficit to pay dues of £ 10,000
iv. Borrow rupees to pay the dues and convert then into £ for payment.
How many Rupees you should borrow ? Vikrant Kelkar: Basics of Forex
 Page 3
Question 14
Exchange rate at Counter of Authorized Dealer (A.D.) is ₹ 5/₹ 6 for one Turki Lira ₺
It means the quote is ₹ 5 as Bid Price and ₹ 6 as Ask Price
Exchange rate at Counter of Authorized Dealer (A.D.) is ₹ 104/ ₹ 106 for one Pound £
You have £ 100 in your pocket.
You have decided following steps :
i. First convert the £ into ₹
ii. Then Convert available ₹ into ₺
Now complete the line
£ 100 = ₹ …..... = ₺ ….....
And also suggest
₺ 100 = ₹ …..... = £ ….....
And also suggest
₹ 1 = ₺ …..... = £ ….....
Question 15
Exchange rate is ₹ 74 /₹ 76 for one USD $
Exchange rate is ₹ 85 /₹ 88 for one Euro €
Exchange rate is $ 1.1 / $ 1.3 for one Euro €
You have ₹ 100 in your pocket.
a. Computation of ₹ $ € Arbitrage
You have decided following steps :
i. First convert the ₹ into $
ii. Then Convert available $ into €
iii. Finally Convert available € into ₹
Are you getting more ₹ than earlier ₹ 100 ?

b. Computation of ₹ € $ Arbitrage
You have decided following steps :
i. First convert the ₹ into €
ii. Then Convert available € into $
iii. Finally Convert available $ into ₹
Are you getting more ₹ than earlier ₹ 100 ?
c. How many more arbitrage you have ? Suggest the most profitable one.
Question 16
Exchange rate is ₹ 20 /₹ 22 for one Emirati dirham ‫إ‬.‫د‬
Exchange rate is ₹ 58 /₹ 60 for one Canadian Dollar $ CAD
Exchange rate is 2.5 ‫إ‬.‫ د‬, 2.8 ‫إ‬.‫ د‬for one Canadian Dollar $ CAD

i. You have ₹ 100 in your pocket.

You have decided the following steps :
i. First convert the ₹ into CAD $
ii. Then Convert available CAD $ into ‫إ‬.‫د‬
iii. Lastly convert ‫إ‬.‫ د‬into ₹
Are you getting more ₹ than ₹ 100 ?

ii. Now complete the line, if the transactions are made in the given sequence
CAD $ 100 = ₹ …..... = ‫إ‬.‫… د‬..... = CAD $
And also suggest
CAD $ 100 = ‫إ‬.‫… د‬..... = ₹ ….... = CAD $
And also suggest
‫إ‬.‫د‬100 = CAD $ …. = ₹ ….... = ‫إ‬.‫… د‬.....
And also suggest
‫إ‬.‫د‬100 = ₹ …. = CAD $ = ‫إ‬.‫… د‬.....
Which of the above 4 transactions sequence is giving you highest profits ? Vikrant Kelkar: Basics of Forex
 Page 4
Question 17
Exchange rate at Counter of HDFC bank is ₹ 73.55 ₹ 74.35 for one Dollar
Exchange rate at Counter of HDFC bank is ₹ 105.70 ₹ 107.70 for one Pound
Suggest cross rate in between Dollar and Pound.
i.e. 1 $ = ? / ? Pounds and 1 Pound = ? / ? Dollars
Hint
When Rates between two currencies say B and C are given in respect of currency A
Then Cross Rate for B/C are:
(B/C) Bid = (B/A) bid X [1/(C/A)] ask or (B/A) bid X (A/C) bid
(B/C) Ask = (B/A) ask X [1/(C/A)] bid or (B/A) ask X (A/C) ask

Question 18
Exchange rate at Counter of HDFC bank is ₹ 74.50 ₹ 75.25 for one Dollar
Exchange rate at Counter of HDFC bank is ₹ 100.00 ₹ 102.75 for one Pound
Exchange rate at Counter of HDFC bank is ₹ 85.25 ₹ 86.45 for one Euro
Exchange rate at Counter of HDFC bank is ¥ 1.55 ¥ 1.75 for one Rupee
Suggest all indirect rates for above

Question 19
Exchange rate at Counter of HDFC bank is ₹ 74.50 ₹ 75.25 for one Dollar
Exchange rate at Counter of HDFC bank is ₹ 100.00 ₹ 102.75 for one Pound
Exchange rate at Counter of HDFC bank is € 0.012 € 0.128 for one Rupee
Exchange rate at Counter of HDFC bank is ¥ 1.55 ¥ 1.75 for one Rupee
Suggest cross rate in between
i Dollar and Pound.
ii Pound and Euro
iii Euro and Dollar

Question 20
Exchange rate at Counter of HDFC bank is $ 0.0135 $ 0.0148 for one Rupee
Exchange rate at Counter of HDFC bank is ₹ 100.00 ₹ 102.75 for one Pound
Exchange rate at Counter of HDFC bank is € 0.012 € 0.128 for one Rupee
Exchange rate at Counter of HDFC bank is ¥ 1.55 ¥ 1.75 for one Rupee
Suggest cross rate in between
i Dollar and Yen
ii Pound and Yen
iii Yen and Euro
iv Dollar and Pound

Question 21
FOREX quote in India on 21.12.2021 are as follows:
Spot: 1 $ = ₹ 75.00
1 Month Forward = ₹ 76 2 months Forward = ₹ 78
Suggest whether $ is appreciating or depreciating.
Compute Swap rate for 1 month and 2 months
Compute the rate of forward discount / premium for 1 month and 2 months
Hint
Spot Rate: Rate of day on which FC transaction has taken place. Execution after 2 days max.
Forward Rate: Rate predefined on today for FC transaction to be taking place in future.
Swap Rate: Forward Rate – Spot Rate (Average of Bid and Ask is the rate if both are available)

Forward Premium p.a. : [(Forward Rate – Spot Rate)/Spot Rate] X [12/ Number of months] X 100
Forward Discount p.a. : [(Spot Rate – Forward Rate)/Spot Rate] X [12/ Number of months] X 100
Vikrant Kelkar: Basics of Forex
To compute Forward Premium or Discount, take Average of Bid and Ask, if both are available.
 Page 5
Question 22
FOREX quote for Philippine Peso in India on 21.12.2021 are as follows:
Spot: 1 ₱ = ₹ 1.4512 1 Month Forward ₱ = ₹ 1.5558
2 months Forward ₱ = ₹ 1.4859 3 months Forward ₱ = ₹ 1.3845

Suggest whether ₱ is appreciating or depreciating for all quotes.

Compute swap rate for 1 month, 2 months and 3 months
Compute the rate of forward discount / premium for 1 month, 2 months and 3 months

Question 23
FOREX quote for South Korean Won in India on 21.12.2021 are as follows:
Spot: 1 ₩ = ₹ 0.06258/ 0.06314 1 Month Forward ₩ = ₹ 0.06318/ 0.06395

i. Compute the rate of forward discount / premium for 1 month

ii. If you are importer in India. You have to pay 1 million South Korean Won to a supplier
in South Korea in next one month.
a. How much ₹ you have to pay to get these Won if the transaction is made on today at spot ?
b. Is it advisible to enter into Forward Conctract (FC) with dealer at forward rate and
wait for 1 month and then to convert available ₹ into Won as per FC ?

c. Suggest the better option in between a. and b. with reasons.

Question 24
FOREX quote for South Korean Won in India on 21.12.2021 are as follows:
Spot: 1 ₩ = ₹ 0.0625/ 0.0631 2 Month Forward ₩ = ₹ 0.0645/ 0.0653
You have to pay 1 Million ₩ to your supplier in next 2 months.

Suppose the banks are offering interest rate of 6% p.a. on deposits made in ₹.
Now your strategy is as follows:
a. Make a forward contract with Authorized Dealer to purchase 1 million Won after 2 months.
b. Compute necessary ₹ for getting 1 million Won today. And keep them aside.
c. Make deposits of ₹ as above in India bank for two months. Earn interest on that.
d. After 2 months, withdraw deposits with interest and convert available ₹ in Won as per FC.

Are you getting any profits after these transactions ?

Question 25
FOREX quote for South Korean Won in India on 21.12.2021 are as follows:
Spot: 1 ₩ = ₹ 0.0625/ 0.0631 3 Month Forward ₩ = ₹ 0.0667/ 0.0689

You have to pay 1 Million ₩ to your supplier in next 3 months.

I. Suppose the banks are offering interest rate of 12% p.a. on Loans made in ₹.
You do not have necessary ₹ to pay the supplier right now. But you are expecting inflow after 3 months.

Now your strategy is as follows:

a. Compute ₹ payable to Authorized Dealer to purchase 1 million Won after 3 months if FC is made today.
b. Compute necessary ₹ for getting 1 million Won today. And borrow it at prevailing rates.
c. Convert borrowed ₹ in b. above into Won today and keep it aside.
d. Wait for 3 months and pay the supplier.
e. Pay off the loan in ₹ along with interest after 3 months from other earnings.
f. Compare payout in ₹ in e. with ₹ necessary to purchase 1 million Won if Forward Contract was entered in a.
Suggest is it a good strategy ? And why ?? Vikrant Kelkar: Basics of Forex
 Page 6
II. Suppose the banks are offering interest rate of 6% and 12% p.a. on Deposits and Loans made in ₹.
and rate of 4.8 % and 7.2 % p.a. on Deposits/ Loans made in ₩

You have necessary ₹ to pay the supplier right now.

Now your strategy is as follows:

a. Compute ₹ payable to Authorized Dealer to purchase 1 million Won after 3 months if FC is made today.
b. Compute necessary ₹ for getting 1 million Won today.
c. Purchase necessary ₩ today from available funds in
d. Keep available funds in ₩ into bank deposits for 3 months.
e. At the end of 3rd month, withdraw the ₩ with interest and pay the supplier
Suggest is it a good strategy ? And why ??

III. Suppose the banks are offering interest rate of 6% and 12% p.a. on Deposits and Loans made in ₹.
and rate of 4.8 % and 7.2 % p.a. on Deposits/ Loans made in ₩

You do not have necessary ₹ to pay the supplier right now. But you are expecting inflow after 3 months.

Now your strategy is as follows:

a. Compute ₹ payable to Authorized Dealer to purchase 1 million Won after 3 months if FC is made today.
b. Compute necessary ₹ for getting 1 million Won today. And borrow it at prevailing rates.
c. Convert borrowed ₹ in b. above into Won today and deposit the same in Bank.
d. Wait for 3 months withdraw ₩ with interest. Pay your supplier 1 million ₩.
e. Pay off the loan in ₹ along with interest after 3 months out of other receipts.
f. Compare payout in ₹ in e. with ₹ necessary to purchase 1 million Won if Forward Contract was entered in a.
Suggest is it a good strategy ? And why ??
h. Compare ₩ earned in d. with actual payables i.e. 1 Million ₩.
Is this profit making transaction ?

€ Euro EUR
¥ Yen JPY
£ Pound GBP

₹ Rupee INR
₺ Turki lira TRY
₱ Philippine peso PHP
৳ Bangladeshi taka BDT
₩ South Korean Won KRW
฿ Thai Baht THB
元 Chinese Yuan CNY

‫إ‬.‫د‬ Emirati Dirham AED

₪ Israeli Shekel ILS

Vikrant Kelkar: Basics of Forex