Cross Currency Calculations (Forex) | CA Final SFM (New Syllabus) Classes & Videos
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- Опубликовано: 19 янв 2019
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Cross Currency Calculations (Forex):
Executing a foreign exchange transaction between the major international currencies is usually straightforward, as most banks will be trading and making a price between all the major currencies. However, for less common currencies, many banks will not run books and therefore rates are not always quoted or easily available.
In order to establish the appropriate rate of exchange, the cross-rate between the two currencies has to be calculated. This works by translating the first currency into a common currency (often the US Dollar) and then translating the common currency into the second currency. This then determines the cross-rate between the two currencies.
All foreign exchange rates are quoted base currency/variable currency - in other words, an amount of the variable currency in exchange for one unit of the base currency. So for USD/CAD, the US Dollar is the base currency and the rate quoted will be the amount of Canadian Dollars for one US Dollar.
In most cases, the base currency will be US dollars for both currencies and this will enable the cross-rate to be calculated quite easily. However, for some currencies, the FX market convention is that the US Dollar is the variable currency, such as in the trade GBP/USD when the pound becomes the base currency and the amount of dollars varies.
Finally we must remember that for all foreign exchange trades, the dealer can quote two numbers - the first is the bid rate (the rate at which the trader will buy the currency), the second is the offer rate (the rate at which the trader will sell the currency). The dealer always wants more currency if selling units of the base currency than will be given away if currency is being provided for units of the base currency. The difference is the margin and is one of the sources of profit to the dealer.
#CrossCurrencyCalculation, #Forex, #InternationalFinance, #CrossRates
I am not a CA student but this was. very helpful! Thanks for explaining it in such simple terms.
Thanks alot. I got my concepts clear for this topic through ur way of teaching. 😊
Thank you so much sir... Please continue in english, so that many non hindi people like me will get benefited.
Very helpful for me! Thank you so much!
Amazing..
Your voice is so clear..
Thank u sir...ur video helped me to understand the cross rate concept....
Hat's off ur understanding way
Thanks you so much
Thank you! Great explanation 👍
It is really a great explanation for the confusion of currency exchange.
Thank you sir . Your explanation with presentation always providing us the clarity.
No words from me. So I subscribed. Really good explanation
Thank you sir. The explanation was very very clear.
Thank You, Helped a lot !!
thanks you very much sir for removing my difficulties in the topic
What a professor uh are.... Brilliant ❣❤
Amazing 🙌 very supportive. Big Thanks.
MBA Finance student here
When i get stuck in SFM i come to you Sir & you always impress me 😅 #ThankYou 😇 & Happy Teachers Day (Belated)
THANK YOU SIR IT IS NOW VERY CLEAR
What the hell.... So much clear.. A great way of explaining. I m not Commerce student but i can understand... Wonderful explanation...
Outstanding Sir!
Thanku so much sir,the most clear explanation I got.😊🙆
Sir ur explanation is realy fantastic now only am able to solve forex problems thanks sir
One of the best video explanations i have come across. I am not a CA student but a CFA candidate. You will never find a simple explanation to this concept as you have done. The Triangular arbitrage is also extremely good and simple to follow. Thank you sir.
Wonderful teaching methodology
Excellent explanation sir
Fabulous this video is very helpful
Thanks you sir for good video for attending CMA exam in sep-2020 ..
Thank you sir.. U r awesome
Very helpful .. thank you sir....
thank you so much sir
Woah ! Explanation :) ThankYou sir ! I was getting confused, but now crystal clear !
I am a CA final student ( Nov 2021 Due)
Cleared inter and CPt in 1st attempt (being a science student)
This video was really helpful been trying to understand this for the past hour but now I'm 💯 Sure of what I'm suppose to. ❤❤❤
Wonderful explanation sir...
Thanx alot....
Too gud sir!!
Very helpful
Excellent
Very Nice explanation Sir.
Very nice sir
What an explanation!! Maza agya🔥
great very informative
Ekdam clear......
Really helpful 👍
But I have a question..
Why we are buying at ask rate & selling at bid rate ???
Sir really you are very awesome you learn very clearly and it is very helpfull to our learning thanks sir
Thanks and welcome
Super Explanation Sir.
Sir you are a life saver thankyou for all these videos
Glad to help
Excellent..Thankful😇
Thanks and welcome
Cann i get concept 2 to 4
very nice video sir
Amazing sir
Excellent sir, always continue only English version
conceptual explanation
Ek no.
GOD BLESS YOU ALWAYS
I am confuse on CADCHF OR GBPCAD or EURCAD like pairs.. for CADCHF which 2 pair will compare for CADCHF selling or buying?? I mean if see CADJPY and CHFJPY for CADCHF for selling so there both CADJPY and CHFJPY should be sell side or here CHHFJPY should UP side then CADCHF will move downword???
dear Sir, in 'understanding the quotes' shouldn't it be USD/INR and GBP/USD , as in the first case, the USD is the base currency while INR is variable and in the second case GBP is the base currency and USD is the variable? looking forward for your reply!
From what I understand is that because we want to find INR/GBP we have to do it sirs way unless we will end up with an indirect quote as GBP/INR is the same as 1/91.8
Superb sir
Sorry sir but as a mathematical equation. Usd1=inr 68
Inr/usd =1/68.
Please clear my doubt sir where I am doing mistake please guide.
Thank You Dear Rakesh for showing this concern.
This video is meant for CA Final Students. These students have to follow the material provided by ICAI. When we say INR/USD, it is read as "Units of INR per USD" which is 68 in the example given.
However, internationally the style of quoting the rates is different. If I have to convey the same example in that context, INR/USD will be read as "Quote of INR in terms of USD" which will be definitely 1/68.
Please don't just look into text appearing on the screen. Kindly listen to the explanation offered in the video.
@@NikhilJobanputra OK sir thanks for replying.
Thank you so much sir.. It means allot to me... I have my CA final exams in November 19 doing self study.. And I was getting confused in this... Thanks allot...
Nice video
Nice
sir can you solve questions in which margin is given. Pls
Great sir 💕💕 I am not CA student I am BBS student from Nepal. You are my only foreign great teacher 🌹🌹
Thanks and welcome
Nobody just nobody can make sense like u sir. Please continue in English sir .
Thank you so much sir please continue in English sir
Dear sir,
Really you are an expert in teaching,
In general most of us learn a lot and able to absorb quickly, but don't knew to teach...
Your have been gifted with teaching attitude by god
Dear sir. I am Muzaffar Hussain from Pakistan.
May Allah bless you with Hidaya.
You have really a God - blessed method of teaching.
I am also a teacher.I like you.
If I take bid rate from bank when i get low amount than ask rate Why ??
Dear Moazzam,
The choice is not in your hand, because if you need to buy the currency from the bank the applicable rate is NOT the Bid Rate. The applicable rate is ASK Rate
Excuses why you multiplied 68*1.35، instead of 68/1.35 as it explains in formula
Nyc vry nyc.. vedio sir
SUPER - SIR
Sir u r video classes are in navkar digital institute. But the material is navkar institute material. Can u upload u r material in navkar institute sir
Sir i have a doubt in a question on Cross Currency , i have the solution with me but I am just not able to understand the concept of this question properly . Kindly clear my concept sir , I have seen the video that you have uploaded on Cross Currency but kindly clear my concept for this question .
Start & Co has a payable of $1 Lakh. A bank has offered 3 month forward rate of 1$ = 68 Rs. In the meanwhile the treasury dept of the company has forecast ed the rate likely to prevail after 3 months to be in the range of 66$ - 70$ . Management of the company has given a budgeted rate of 69 Rs/$ for this transaction . Show by calculation, how much should hedge ,so as to take advantage of favorable re pot rate which might prevail after 3 months and also achieve budgeted rate.
Nikhil sir. Concepts were cleared but i have a query which is what if in the example of cross rate the second rate instead of $/£ was £/$ but we still need to find INR/£ ... Would we be still able to multiply bid*bid and ask*ask rate? I don't think so sir. Kindly explain if possible with this little change.
Please wait for my upcoming video on this concept
What I have mentioned in the video is a fact that will prevail under all situations. So don't forget to watch the extended video on this matter.
Sir you are mind blowing I have shared your channel to many of my university Facebook pages....when I was learning these in class it was difficult Trust me your explanation is mind blowing...I'm looking for more videos like these...sir I have a request for you if can kindly make a long video of stock exchange detailing everything
It's my pleasure
Superb videeo
Thank you so much dear
Charan kaha he Prabhu apke
Hello sir.
Can you please help
A) Rs60-65/$
B) GBP1.3-1.4/$
Calculate bid rate and ask rate INR/GBP.
Q2:INR 70-75/$ AND EUR .85-.80/$.
CALCULATE BID RATE AND ASK RATE B/W INR/EUR
Sir how calculate cross rate if base currencies are same ??
I will cover up explanation on the same in another video.
Thank you sir
Ind/usd * usd/gbp become ind/gbp not multiple
Concept #2: 2-Way Quote 08:10. BID Cross Exchange Rate
Its better sir if u explain some in hindi
Dear Chhaya,
All lectures are available in Hindi also in my channel. Please search within channel and you will get them.
why you have multiplied? According to formula, they are supposed to be divided.
I'm an Acca student and this is really useful. I will subscribe the chanel
sir please upload in HINDI language
Thank you sir. Your teaching style is amazing & simple. Your voice also very clear!!!
Thank you sir
thank you sir