IFM ASSIGNMENT

CURRENCY: US DOLLAR GROUP NUMBER 1

GROUP MEMBERS AMAN GROVER APARNA SAPRA SAKSHI JUNEJA SHIEKHER CHHOTTRA MOHD. RIZWAN RAVI SHARMA CHIRAG JAIN ATIF HUSSAIN

In todays market there is a continuous high demand for foreign exchange as foreign trade is increasing at a high rate. The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. This foreign exchange is provided by the BANKS to the customer. The banks can either buy foreign exchange from an exporter (seller) or even sell foreign exchange to an importer (buyer). Banks generally provides exporters and importers with two kind of rates, these rates are known as BID/ASK rates also known as BID/OFFER rates. Now BID rate means purchase rate and ASK rate means sell rate. By purchase rate we mean the rate at which a customer can purchase foreign exchange from the bank and sell rate means the rate at which the customer will sell its foreign exchange to the bank. To understand the concept properly let us take a look at the findings of my (Shiekher Chhottra) group and make a detail analysis of the data collected by my group members. This is the data collected by Aman Grover for AXIS bank.
DATE 1ST WEEK MONDAY- 1ST AUG TUESDAY- 2ND AUG WED- 3RD AUG THURSDAY- 4TH AUG FRIDAY- 5TH AUG BUY 42.75 42.9 43.05 43.05 43.5 SELL 45.34 45.5 45.65 45.65 46.1

Table 1.1 BID/ASK rate for Axis bank The above data shows the buy (bid) and sell (ask) rate for Axis bank that it offers to its customers. On Monday, 1st of August Axis bank buy rate was quoted at 42.75 INR per US$ and sell rate was quoted at 45.34 INR per US$. This means if an Importer wants to exchange INR for US$ from Axis bank he will have to pay 45.34 INR for 1 US$ to the bank. If an exporter wants to exchange US$ for INR he will get 42.75 INR for 1 US$. The buy rate which bank quotes is basically from the banks point of view and not the customer. If a customer wants to BUY from bank then it means bank is selling to the customer, thus the SELL rate applies and if a customer wants to SELL to the bank then it means bank is buying thus the BUY rate applies. The chart shows the BID/ASK rate for 1st week of august. As we can notice the buy rate is on an increase. This means US$ is gaining strength in comparison to the INR (Indian National Rupee).

This is the data collected by Aparna Sapra.

Date 1/08/2011(Monday) 2/08/2011(Tuesday) 3/08/2011(Wednesday) 4/08/2011(Thursday) 5/08/2011(Friday) Buy Sell

43.89 44.20 43.05 44.36 44.22 44.54 44.16 44.5 Bank was on strike

Table 1.2. BID/ASK rate for PN bank. This table shows the BID/ASK rate for PUNJAB NATIONAL BANK (PNB). The BID/ASK is same as in the case for every bank whether it is a private bank or public bank or even a foreign bank. The rate at which bank buys from you was 43.89 INR per US$ on Monday the 1st of August, and selling rate was 44.20 INR per US$. There is a slight decrease on Tuesday of about .84 INR in buy rate and increase of .16 INR in sell rate. This increasing trend is followed by Wednesday and buy rate is increased to 44.22 INR per US$ and sell rate to 44.54 INR per US$. The rates decrease by a slight margin on Thursday i.e. buy rate by .06 INR and sell rate by .04 INR. The rates on Friday were not available due to strike in PSU banks.
DAY MON TUES WED THUR FRI DATE 1st aug 2nd aug 3rd aug 4th aug 5th aug BANK TO BANK RATE

44.09 44.26 44.33 44.64 Bank was on strike

Table.1.2.1 showing Bank to Bank rate for PNB The above tale shows the Bank to Bank rate for PNB. Bank to bank rate means a rate at which one bank sells to another bank or at which one bank buys from another bank. This rate was 44.09 INR per US$ on Monday. It showed a positive increase for the rest of the week. On Tuesday it increased by .17 INR per US$. On Thursday it was 44.64 INR per US$. On Friday due to strike in public sector banks the rates were not available.

The following data is collected by Ravi Sharma.

Date 1/08/2011(Monday) 2/08/2011(Tuesday) 3/08/2011(Wednesday) 4/08/2011(Thursday) 5/08/2011(Friday)

Buy 42.08 42.22 42.38 42.53 42.78

Sell 46.05 46.2 46.38 46.35 46.82

Table 1.3. BID/ASK rate for Standard Chartered Bank. This table shows the foreign exchange rates of standard chartered bank which is a foreign bank. Now the buy rate on 1st August is 42.08 INR per US$ and sell rate is 46.05 INR per US$. The rates move slightly up on Tuesday by .14 INR per US$ for buy and .15 INR per US$ for sell. This trend is followed throughout the week except on Thursday when the sell rate shows a slight decrease from the previous day. This decrease is of just .03 INR per US$.

The following rates were provided by Sakshi Juneja.

Day Mon Tue Wed Thu Fri Date 01/08/2011 02/08/2011 03/08/2011 04/08/2011 05/08/2011 Bid 43.11 43.51 43.68 43.8 44.13 Ask 44.65 44.95 45.13 45.24 45.59

Table 1.4. BID/ASK rate of HDFC bank. The table depicts the bid and ask rate of HDFC bank for the 1st week of August. The buy rate on Monday was 43.11 INR per US$ and sell rate was 44.65 INR per US$. The rates on the following rate day showed an increase of .40 INR per US$ for buy and .30 INR per US$ for sell. This trend continues till Friday and the rates end at a high end of 44.13 INR per US$ for buy and 45.59 INR per US$ for sell.