Exchange Rates -Exercises

E1 Dr Vikas Kumar is a valuable customer of the branch. He has substantial deposits. To enable import of medical equipment, he requests you to make an advance remittance of USD 30,000.Import will actually take place after one month. The item is eligible for import under Free List of the current FTP

Inter bank Market quote is

$/Rs 1m 3m

44.7050- 7350 2500- 2700 3500-4000

Your bank requires a exchange margin of 0.10% What rate you will quote to Dr Vikas?

E2 Your exporter tenders documents for US $100,000 for negotiation under Citi Bank New York L/C Documents are as per terms of L/C. Reimbursement is available by drawing Bill of exchange on the Issuing Bank Inter bank Market quote is $/Rs 44.7050- 7350

1m 2700- 2500 3m 3500-3300 You require an exchange margin of 5 paise per $. Negotiation commission is 0.2%. Interest on capital out lay is payable @ BPLR -2.5% for 180 days. The BPLR of the bank is 12.5% What will be the Rupee amount payable to the exporter?

E3 Your exporter customers submit documents for discounting within the sanctioned limit. The bill of exchange is for US$ 200,000 payable 30 days after sight. Inter bank Market quote is $/Rs 44.7050- 7350 1m 2500- 2700 2m 3000-2900 3m 3500-3700 Exchange margin required is @ 0.12%Discounting charges are @ 0.3%. Interest on capital out lay is payable @ BPLR -2.5% for 180 days. The BPLR of the bank is 12.5% What Exchange rate you will quote to the customer?

E4 India International Ltd submit Sight Bill for CAD 150,000 for Purchase.

Inter bank Market quote is

$/Rs

46.7050- 7250 1m 2500- 2230 2m 3000-3400 3m 3500-3700

Toronto interbank is

$/CAD

1.0019-0029 1m 2222-2288 2m 3333-3399 3m 4000-4100

The exchange margin required is 0.10%. NTP is 25 days What exchange rate you will quote to the customer?

E4 Exim international is to make payment of a 30 days bill of US$ 50,000 today Inter bank Market quote is $/Rs 44.7050- 7350

1m 25- 29 2m 30-34 3m 35-40 Exchange margin is 0.15%. What exchange rate you will quote to the customer?

E5 Mrs Shobha is travelling to USA on holidays . She request you to issue TC for US$ 2000 and CN of US $ 1000 under BTQ. What documents you will ask from her and what rate you will quote to her? Inter bank Market quote is $/Rs 44.7050- 7350 1m 2m 3m 25- 29 30-34 35-40

Quote rates:

A] TT Buying rate for inward payment of USD 250,000 if interbank rate is 46.00/02 and exchange margin required is 0.08%

B] Bill selling rate for import bill of USD 100,000 if interbank market quotes as under $/Rs 46.7650/7750 Margin required is 0.2%

C] TT Buying rate for GBP 50000 inward payment, if $/Rsis 46.00/02 and GBP/$ is 1.5875/85 Margin required is 0.08%

D] Issuance of draft for JPY100,000 if The market rates are as under Delhi interbank $/Rs 46.9400/75

Tokyo interbank $/JPY 109.50/55 Exchange Margin is 0.125%

E] Import documents for USD 190,000 are received which are due for payment on 30 days DA terms Market quote as under

USD/INR 1m 2m 3m

46.7850/7950 0.0850/0950 0.1700/1600 0.2500/2550

----------------------------------------------------------------------------------------------------------By: K K Jindal, Managing Director, Global Management Services, New Delhi E mail : gms03@rediffmail.com kamaljindal@hotmail.com