How To Calculate With Exchange Rates
| An exchange rate tells us the value of one country’s currency measured in terms of how much foreign currency it can buy. In simpler terms, exchange rate is the price we pay in local currency in exchange for the foreign currency. |
Sponsored Links :
|
For instance, if the price of a chocolate is fifty cents, then, the dollar-to-chocolate exchange rate is 2 because if we pay one dollar, we can get two chocolates in return. Similarly, the chocolate-to-dollar exchange rate is 1/2 of a dollar or 50 cents, because if you sell a single chocolate, you will get back 50 cents in return. Although we have used chocolates to explain the concept of exchange rate in very simple terms, in a real economic market scenario, exchange rates are nothing but relative prices for different currencies.
On January 16, 2008, the US Dollar to Japanese Yen exchange rate was 106.29 yen, which means that you can purchase 106.29 Japanese yen in exchange for 1 US dollar and 0.0094 US dollars in return for 1 Japanese yen. On January 16, 2008, the US Dollar-to-Indian Rupees exchange rate was 39.17 and Indian Rupee to the US Dollar exchange rate was 0.0255 which means that for every 1 dollar, we can get 39.17 Indian Rupees in return. Similarly, for every Indian Rupee, we can get 0.025 U.S. dollars in return. Likewise on January 16, 2008, the US Dollar to Canadian Dollar exchange rate was 1.0239 and the Canadian Dollar to the US Dollar exchange rate was 0.97659.
Similarly, in order to calculate how many US dollars you can get for 1 Euro, we can just use the formula:
US Dollar to Euro exchange rate = 0.6761437954
Therefore, Euro to US-Dollar exchange rate = 1/0.676, which is equal to 1.4789.
This simple formula can be used for conversion between any 2 currencies.
More Articles :
|
How To Calculate With Exchange Rates