Example

Assume that the spot rate changes from $0.6400 per A$ (Australian dollar) to $0.6800 per A$ over a 1-year period. The percentage change in the Australian dollar spot rate using direct quotes for a US company is calculated as follows:

, $0.6800 — $0.6400 percentage change =---= 0.0625

In this case, the Australian dollar has become 6.25 percent stronger than the US dollar over the 1-year period.

Indirect quotations When the foreign-currency price of a home currency (indirect quote) is used, the formula to compute the percentage change in the spot rate for a foreign currency becomes:

beginning rate — ending rate percentage change =---

ending rate

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