Unit - 4 Currency and Exchange Rate

 Unit - 4 Currency and Exchange Rate

1. Money Exchange and Usage

(a) What is meant by money exchange?
Money exchange refers to the process of converting one country's currency into another country's currency at a specified exchange rate. This process is typically carried out for purposes such as international trade, travel, education, or investment.

---

(b) Which rate (buying or selling) does a Nepali student use to exchange Nepali Rupees into American Dollars while studying abroad in America?
A Nepali student uses the selling rate to exchange Nepali Rupees into American Dollars when going abroad for study. This is because the bank or money exchange service sells foreign currency (USD) in exchange for Nepali Rupees.

---

2. Currency Conversion

Using the given buying rates, convert the following currencies into Nepali Rupees. The formula is:

$$\text{Nepali Currency} = \text{Foreign Currency} \times \text{Buying Rate}$$

Currency	Foreign Amount	Buying Rate (Example)	Nepali Currency (Rs.)
(a) Indian Rupees	1425	1.6	$1425 \times 1.6 = 2280$
(b) American Dollars	2000	120	$2000 \times 120 = 240,000$
(c) Pound Sterling	4672	160	$4672 \times 160 = 747,520$
(d) Australian Dollar	672	80	$672 \times 80 = 53,760$
(e) Saudi Riyal	1851	32	$1851 \times 32 = 59,232$
(f) Qatari Riyal	2225	33	$2225 \times 33 = 73,425$
(g) South Korean Won	58,230	0.09	$58,230 \times 0.09 = 5,240.7$
(h) Hongkong Dollar	4512	15	$4512 \times 15 = 67,680$
(i) Malaysian Ringgit	6725	28	$6725 \times 28 = 188,300$
(j) Chinese Yuan	3450	17	$3450 \times 17 = 58,650$

---

Summary of Currency Conversion

• Indian Rupees: Rs. 2,280
• American Dollars: Rs. 240,000
• Pound Sterling: Rs. 747,520
• Australian Dollar: Rs. 53,760
• Saudi Riyal: Rs. 59,232
• Qatari Riyal: Rs. 73,425
• South Korean Won: Rs. 5,240.7
• Hongkong Dollar: Rs. 67,680
• Malaysian Ringgit: Rs. 188,300
• Chinese Yuan: Rs. 58,650

3. Converting Rs. 200,000 into Foreign Currencies (Using Selling Rates)

The formula for converting Nepali Rupees to foreign currencies is:

$$\text{Foreign Currency} = \frac{\text{Nepali Currency}}{\text{Selling Rate}}$$

Given that Rs. 200,000 is to be converted:

(a) Australian Dollar
If the selling rate of 1 Australian Dollar is Rs. 80:

$$\text{Foreign Currency} = \frac{200,000}{80} = 2,500 \, \text{AUD}$$

(b) American Dollar
If the selling rate of 1 American Dollar is Rs. 128:

$$\text{Foreign Currency} = \frac{200,000}{128} = 1,562.5 \, \text{USD}$$

(c) Euro
If the selling rate of 1 Euro is Rs. 135:

$$\text{Foreign Currency} = \frac{200,000}{135} \approx 1,481.48 \, \text{EUR}$$

(d) United Arab Emirates Dirham
If the selling rate of 1 UAE Dirham is Rs. 35:

$$\text{Foreign Currency} = \frac{200,000}{35} = 5,714.29 \, \text{AED}$$

---

Exchange Rate Examples (American Dollar)

Nepal Rastra Bank provides:

• Buying rate: Rs. 127.50 per USD
• Selling rate: Rs. 128 per USD

(a) How many American Dollars can be exchanged for Rs. 81,280?
Using the selling rate:

$$\text{Foreign Currency} = \frac{\text{Nepali Currency}}{\text{Selling Rate}} = \frac{81,280}{128} = 635 \, \text{USD}$$

(b) How many Nepali Rupees can you exchange with 6007 American Dollars?
Using the buying rate:

$$\text{Nepali Currency} = \text{Foreign Currency} \times \text{Buying Rate} = 6007 \times 127.50 = 765,892.50 \, \text{NRs.}$$

---

Summary of Calculations

For Rs. 200,000:

• Australian Dollar: 2,500 AUD
• American Dollar: 1,562.5 USD
• Euro: 1,481.48 EUR
• UAE Dirham: 5,714.29 AED

American Dollar Exchange Examples:

• Rs. 81,280 → USD: 635 USD
• 6007 USD → NRs.: Rs. 765,892.50

4. Exchange Rates for American Dollars (USD)

Nepal Rastra Bank rates:

• Buying rate = Rs. 127.50
• Selling rate = Rs. 128

(a) How many American Dollars can be exchanged for Rs. 81,280?
Use the selling rate to convert Nepali Rupees to USD:

$$\text{Foreign Currency} = \frac{\text{Nepali Currency}}{\text{Selling Rate}} = \frac{81,280}{128} = 635 \, \text{USD}$$

(b) How many Nepali Rupees can you exchange with 600 American Dollars?
Use the buying rate to convert USD to Nepali Rupees:

$$\text{Nepali Currency} = \text{Foreign Currency} \times \text{Buying Rate} = 600 \times 127.50 = 76,500 \, \text{NRs.}$$

---

5. Exchange Rates for Chinese Yuan (CNY)

Nepal Rastra Bank rates:

• Buying rate = Rs. 18.64
• Selling rate = Rs. 18.73

(a) How many Chinese Yuan can be exchanged for Rs. 37,460?
Use the selling rate to convert Nepali Rupees to CNY:

$$\text{Foreign Currency} = \frac{\text{Nepali Currency}}{\text{Selling Rate}} = \frac{37,460}{18.73} \approx 2,000 \, \text{CNY}$$

(b) How many Nepali Rupees can you exchange with 5000 Chinese Yuan?
Use the buying rate to convert CNY to Nepali Rupees:

$$\text{Nepali Currency} = \text{Foreign Currency} \times \text{Buying Rate} = 5000 \times 18.64 = 93,200 \, \text{NRs.}$$

---

Summary of Calculations

4. American Dollar Exchange:

• Rs. 81,280 → USD: 635 USD
• 600 USD → NRs.: Rs. 76,500

5. Chinese Yuan Exchange:

• Rs. 37,460 → CNY: 2,000 CNY
• 5000 CNY → NRs.: Rs. 93,200

More solution Update soon.