Numeracy tests/ currency conversion

#1

I have been going over some practice tests and they usually have currency conversions. I seem to be getting stuck on these and have forgotten my way around them. I realised there is are a few on the practice tests available here as well.

How would you go around solving a question that asks you to convert lets say dollar to sterling from the table below?
Major Currencies
Rupee/unit Ringit/unit
Dollar 42.275 3.25
Yen 0.39 0.03
Sterling 83.4 6.42
Euro 66.09 5.08

and also how would you tackle the following problem?
If the euro fell in value by 11%, how many euros could you buy for 1500 Ringit?

#2

Convert from dollars into either rupees or ringits (doesn’t matter which but be consistent) then convert the Rupees or ringits into sterling.
eg.
$100 buys Rupee 4227.50 (i.e. $100 x 42.275)
Rupee 4227.50 buys £50.69 (i.e. Rupee 4277.50/83.4)

They are just simultaneous equations R/$ =42.275 and R/£ = 83.4 so you can rearrange the terms until you find the exchange rate you want, £/$.

What can help is knowing which currencies are generally strong relative to each other as they tend to keep things fairly realistic, so £ will typically be stronger than $ and €, € stronger than $ and Yen is very weak. Bear this in mind if you end up with an answer implying that there are more yen to the £ than visa versa as this suggests you may be using the exchange rates the wrong way round.

If € weakens by 11% then the new Ringitt/€ rate is 5.08 x 0.89 =4.5212 Ringitt/€
So Ringitt 1500/4.5212 = €331.77

#3

Can anyone help me, am a lil confused how do u know when to divide and when to multiply the currency…i have my grant thornton numerical and verbal in 2 days!!!

#4

It’s:

(currency you are converting from [F]) x (exchange rate from [F] to [T]) = (currency you are converting to [T])

which leads to:

(currency you are converting to [T]) / (exchange rate from [F] to [T]) = (currency you are converting from [F])

Make sure you know which way the exchange rate is though.

#5

Hi all

I recently did an online test which had a currency conversion Q.

The question involved taking into account a currency conversion fee which was expressed as a percentage.

Which got me thinking, when do you apply the fee in your calculations?

Do you apply the fee to the original currency (i.e. deduct x% from value of original currency) BEFORE converting that currency into the desired currency?
Or do you apply the fee AFTER you’ve carried out the currency conversion i.e. deduct x% from the value of the desired currency?

many thanks!

#6

normally it is the original (base currency)

USD/GBP, you will have to pay fee in GBP.

#7

hello,
i was wondering whether someone can help me with this currency question

so the table is the following:

CURRENCY MOVEMENT FEB 16 - FEB 117 2010 %

CAD/USD -0.268
JPY/USD 1.068
AUD/USD -0.809
GBP/USD -0.732
GBP/EUR -0.172
JPY/EUR 1.638
GBP/AUD 0.078

can someone explain to me how to work out the following
(1) the movement of EUR/USD?
(2) What was the movement of JPY/AUD?

THANK YOU! :slight_smile:

#8

(1) GBP/USD moved -0.732% and GBP/EUR moved -0.172%.

Since the percentage represents either growth or decline between two currencies then flipping them around simply causes the percentage to go the opposite way. In this instance we want GBP/EUR to become EUR/GBP and the percentage now moves in the positive direction of 0.172%.

Now you can treat them just like you would fractions: EUR/GBP + GBP/USD = EUR/USD which is the same as -0.732 + 0.172 = -0.56%.

(2) This requires exactly the same steps as (1) so maybe you could try it on your own. (Man, that was textbook teacher reversal right there!)

#9

I tried that method for the second question but didn’t get the answer stated by the test as the right answer, I got 1.877 which would be 1.88. The test gives the answer as 1.89. Also why does the method in the test feedback divide one currency movement by the other? When I do that I get completely the wrong answer.