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Math no7.

May 2012
please calculate the exchange rate of your bank for purchasing a cheque in pound sterling on the basis of
the following date:
a.1 pound=$1.5290-1.5299
b.$1=tk 68.5321-69.2100
c.transit period 10 days
d.interest rate 12%
e.postage 1\32%
f.profit margin per pound sterling TK.10(assume a year as 360 days)

Solution: 1 pound= 1.5290x68.5321- 1.5299x69.2100= 104.7856- 105.8844. Interest=


104.7856x12%x10/360= .3493. postage= 104.7856x1/32%= .0327. Profit= .1000. So Required
rate is 104.7856-(.3493+.0327+.1000)= 104.3036 (Ans)

from the following data pls calculate your BC selling rate of pound sterling and the amount to
be debited to the customer’s a/cfor retirement of import bill for 20000 pound.
1. Spot rate as on 16.10.2011
1 pound=US $1.6030-1.6120
$1=tk.77.3040-78.5060
2. date of negotiation by the negotiating bank5.10.2011
3.int rate 16%p.a
4.profit margin 1/10%
5.handling charge 1/32%
pls note that total amount to be realized from the customer's a/c will consist of taka
equivalent at the BC selling rate plus the amount of interest from 05.10.11-16.10.11

Solution, Given,
$ 1 = Tk. Tk. 77.3040 - 78.5060
£ 1 = USD 1.6030 - 1.6120;
So, £ 1 = Tk. 77.3040 × 1.6030 - 78.5060 × 1.6120
£ 1 = Tk. 123.9183 - 126.5517
Exchange Margin (1/10 %) = Tk. 126.5517 × 1/10 % = 0.1266
Handling Charges (1/32 %) = Tk. 126.5517 × 1/32 % = 0.0395
Required BC selling Rate, £ 1 = Tk. 126.5517 + 0.1266 + 0.0395 = Tk. 126.7178
Total Loan to be given = Tk. 126.7178 × 20,000 = Tk. 25,34,356
Interest Charges = Tk. 25,34,356 × 16 % × 12/360 = Tk. 13,516.56
The required amount to be realized = Tk. 25,34,356 + 13,516.56 = Tk. 25,47,872.56
SOLUTION: 7

Given,
$ 1 = Tk. 73.9020 - 74.8030
£ 1 = $ 1.6150 - 1.6180
So, £ 1 = Tk. 73.9020×1.6150 - 74.8030×1.6180 = Tk. 119.3517 - 121.0313
Exchange Margin = Tk. 0.20
SWIFT Charges (1/32 %) = 121.0313 × 1/32 % = 0.0378

Required Rate, £ 1 = Tk. 121.0313 + 0.20 + 0.0378 = Tk. 121.2691

The required amount to be realized = 121.2691 × 1,000 = Tk. 1,21,269.10

SOLUTION: 8

Given,
$ 1 = Tk. 73.9020 - 74.8030
£ 1 = $ 1.4947 - 1.4957
So, £ 1 = Tk. 73.9020×1.4947 - 74.8030×1.4957 = Tk. 110.4613 - 111.8828

Interest Charges (10%) = 110.4613×.10×(130/360) = 3.9889


Profit Margin = 0.1000
Usance Rate, £ 1 = 110.4613 - 3.9889 - 0.1000 = Tk. 106.3724

Question: 7
Please work out the exchange rate of your bank to buy an export bill for £10,000 on the basis
of the following data :

(i) Prevailing exchange rates :


£1= US$ 1.5650 - 1.5655
US$ = Tk 82.2800-82.2500
(ii) The bill is drawn on 60 days sight basis;
(iii) Interest rate 10% per annum;
(iv) Your bank's profit margin Tk 0.10 per £;
(v) Banks Overhead charge 1/32%;
(vi) Transit period 10 days.
SOLUTION: 7
There is a confusion regarding US$ rate in the question. Usually the 1st one (Buying Rate) will
be smaller than the 2nd one (Selling Rate). Here we assume that the smaller (2nd one) is
buying rate.

Given,
$ 1 = Tk. 82.2800 - 82.2500
£ 1 = $ 1.5650 - 1.5655
So, £ 1 = Tk. 82.25×1.5650 - 82.28×1.5655 = Tk. 128.7212 - 128.8093
Interest Charges (10%) = Tk. 128.7212×.10×(70/360) = 2.5029
Profit Margin = 0.1000
Overhead Charges = Tk. 128.7212×(1/32 %) = 0.0402
The Required Rate, £ 1 = 128.7212 - 2.5029 - 0.1000 - 0.0402 = Tk. 126.0781

Question: 8
Please calculate the exchange rate of your bank for remittance of Euro 10,000 by TT to Paris by
using the following data :
(i) Rate of exchange in the interbank market:
€ = US$ 1.2296-1.2294
$ = Tk 82.2800-82.2500
(ii) Your banks policy is to load a profit margin @1/16%
(iii) You may load SWIFT charges at the rate of 1/32%
Please also calculate the amount to be debited to the customer’s account.

SOLUTION: 8
There is a confusion regarding US$ rate and the Pound Rate in the question. Usually the 1st
one (Buying Rate) will be smaller than the 2nd one (Selling Rate). Here we assume that the
smaller (2nd one) is buying rate.

Given,
€ = US$ 1.2296-1.2294
$ = Tk 82.2800-82.2500
Assume the Rate of exchange in the interbank market:
€ = US$ 1.2294 - 1.2296
$ = Tk 82.2500 - 82.2800
So, € 1 = Tk. 82.25×1.2294 – 82.28×1.2296 = Tk. 101.1181 - 101.1714
Exchange Margin = Tk. 101.1714 × (1/16 %) = 0.0632
SWIFT Charges (1/32 %) = 101.1714 × (1/32 %) = 0.0316
Required Rate, £ 1 = Tk. 101.1714 + 0.0632 + 0.0316 = Tk. 101.2662
The required amount to be debited from customer’s account = Tk. 101.2662 × 10,000 = Tk.
10,12,662.00

FOREX MATH: Purchase of Usance Bill from Exporter


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Calculate the exchange rate for buying a 120 days usance bill in pound sterling on the basis of
the following parameters:

GBP 1 = USD 1.4947 – 1.4957,


USD 1 = Tk. 73.9020 – 74.8030.
Transit period = 10 days
Rate of Interest = 10% per annum
Profit Margin = Tk. 0.10 per pound sterling

Assume 360 days a year.

SOLUTION:

Given,
$ 1 = Tk. 73.9020 - 74.8030
£ 1 = $ 1.4947 - 1.4957

So, £ 1 = Tk. 73.9020×1.4947 - 74.8030×1.4957 = Tk. 110.4613 - 111.8828

Interest Charges (10%) = 110.4613×.10×(130/360) = 3.9889

Profit Margin = 0.1000

Usance Rate, £ 1 = 110.4613 - 3.9889 - 0.1000 = Tk. 106.3724

FOREX MATH: Payment of Import Bill (BC Selling Rate)


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From the following data calculate the BC selling rate of pound sterling and the amount to be debited to the
customer’s account for retirement of an import bill for GBP 20,000.
i) Spot rate in the interbank foreign exchange market on the date of lodgment on 16.10.2011

USD 1 = Tk. 77.3040 - 78.5060


GBP 1 = USD 1.6030 - 1.6120;

ii) Date of negotiation by the negotiating bank abroad: 05.10.2011

iii) Rate of Interest = 16% p.a.

iv) Profit Margin = 1/10%

v) Handling Charges = 1/32%

Please note that the total amount to be realized from the customer will consist of taka equivalent at the BC
selling rate plus the amount of interest from 05.10.2011 to 16.10.2011.

SOLUTION:

Given,
$ 1 = Tk. Tk. 77.3040 - 78.5060
£ 1 = USD 1.6030 - 1.6120;
So, £ 1 = Tk. 77.3040 × 1.6030 - 78.5060 × 1.6120 = Tk. 123.9183 - 126.5517

Exchange Margin (1/10 %) = Tk. 126.5517 × 1/10 % = 0.1266


Handling Charges (1/32 %) = Tk. 126.5517 × 1/32 % = 0.0395

Required BC selling Rate, £ 1 = Tk. 126.5517 + 0.1266 + 0.0395 = Tk. 126.7178

Total Loan to be given = Tk. 126.7178 × 20,000 = Tk. 25,34,356

Interest Charges = Tk. 25,34,356 × 16 % × 12/360 = Tk. 13,516.56

The required amount to be realized = Tk. 25,34,356 + 13,516.56 = Tk. 25,47,872.56

FOREX MATH : Outward Remittance through TT


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A customer of your bank requests you to remit GBP 1000 to London by TT. You are requested to work out the
rate of exchange for this remittance using the following data.

i) Exchange rate in the inter bank market – USD 1 = Tk 73.9020 – 74.8030, GBP 1 = USD 1.6150 – 1.6180;
ii) The bank requires a profit margin of Tk 0.20 per pound sterling.
iii) The bank also load SWIFT charges of 1/32 % per pound sterling.
Please also work out the amount to be realized from the customer for the remittance.

SOLUTION:

Given,
$ 1 = Tk. 73.9020 - 74.8030
£ 1 = $ 1.6150 - 1.6180

So, £ 1 = Tk. 73.9020×1.6150 - 74.8030×1.6180 = Tk. 119.3517 - 121.0313

Exchange Margin = Tk. 0.20


SWIFT Charges (1/32 %) = 121.0313 × 1/32 % = 0.0378

Required Rate, £ 1 = Tk. 121.0313 + 0.20 + 0.0378 = Tk. 121.2691

The required amount to be realized = 121.2691 × 1,000 = Tk. 1,21,269.10

Note: In case of Outward Remittance, Banks sell Foreign Currency... so, sell at High... Keep it in mind:.. if from
customers point of view asked for "what will be buying rate?" ... don't try to do the opposite... coz that is also
"implied" selling rate for Banks.

FOREX MATH: Purchasing Foreign Cheque


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Calculate the exchange rate of your bank for purchasing a cheque in pound sterling on the basis of the following
parameters.

i) GBP 1 = USD 1.5290 - 1.5299


ii) USD 1 = Tk. 68.5321 - 69.2100
iii) Transit Period = 10 days
iv) Rate of Interest = 10% p.a.
v) Postage = 1/32%
vi) Profit Margin per GBP = Tk. 0.10 (Assume a year 360days).

Solution:
Given,
USD 1 = Tk. 68.5321 - 69.2100
GBP 1 = USD 1.5290 - 1.5299

So, GBP 1 = Tk. 68.5321 × 1.5290 - 69.2100 × 1.5299 = Tk. 104.7856 - 105.8843

Interest Charges = 104.7856 × 0.10 × 10/360 = Tk. 0.2911


Postage Charges (1/32 %) = 104.7856 × 1/32 % = Tk. 0.0327
Profit Margin = Tk. 0.10
Required Rate, £ 1 = Tk. 104.7856 - 0.2911 - 0.0327 - 0.10 = Tk. 104.3618