1. Currency
Notes:
Currency is the official money of a country used for transactions.
Each country has its own currency (e.g., Nepal = Nepali Rupee, USA = Dollar, China = Yuan).
Nepali Rupees cannot be used directly abroad; foreign currency must be used.
People working abroad send money to Nepal, and their family receives it in Nepali Rupees, converted at the prevailing exchange rate.
Example Qn:
Q: Can a Nepali student buy goods in the USA using Nepali Rupees?
Solution: No. They must exchange Nepali Rupees for US Dollars to buy goods.
2. Exchange Rate
Notes:
Exchange Rate = value of one currency in terms of another.
Determined by: Central Bank of a country (Nepal Rastra Bank in Nepal).
Types of rates:
Buying rate: Rate at which bank buys foreign currency from people.
Selling rate: Rate at which bank sells foreign currency to people.
Selling rate is always higher than buying rate because banks earn profit from the difference.
Formula:
Selling rate−Buying rate=Bank’s profit per unit currency\text{Selling rate} - \text{Buying rate} = \text{Bank’s profit per unit currency}Selling rate−Buying rate=Bank’s profit per unit currency
Example Qn:
Q: $1 = Rs.127.50 (buying), $1 = Rs.128 (selling). How much profit does the bank earn on $500?
Solution:
Profit per $1 = 128 – 127.50 = 0.50
Profit on $500 = 0.50 × 500 = Rs. 250
3. Currency Conversion
Notes:
To convert currencies, we can use Nepali Rupees as a bridge or chain rule.
Chain Rule:
A→B→C ⟹ A×B×C=B×C×AA \to B \to C \implies A \times B \times C = B \times C \times AA→B→C⟹A×B×C=B×C×A
Example: To convert Canadian Dollar (CAD) to Japanese Yen (JPY) using Nepali Rupees:
Example Qn:
Q: 1 CAD = Rs. 98.08, 10 JPY = Rs. 9.37. Find 1 CAD in JPY.
Solution:
1 CAD =98.08÷(9.37/10)=104.67 JPY1 \text{ CAD } = 98.08 \div (9.37/10) = 104.67 \text{ JPY}1 CAD =98.08÷(9.37/10)=104.67 JPY
4. Profit and Loss in Currency Exchange
Notes:
When foreign currency is bought or sold, exchange rate fluctuations can cause profit or loss.
Profit: Nepali Rupee devalues after buying foreign currency.
Loss: Nepali Rupee inflates after buying foreign currency.
Example Qn:
Q: Exchange Rs. 8,40,000 into £ (1£ = Rs.150). After 5 days, Rs. devalues 5%. What is the loss?
Solution:
£ bought = 8,40,000 ÷ 150 = £5,600
New rate = 150 – 5% of 150 = Rs.142.50
Rs. received = 5,600 × 142.50 = Rs.7,98,000
Loss = 8,40,000 – 7,98,000 = Rs. 42,000
5. Import and Export
Notes:
Businesses dealing with international trade must convert currencies.
Selling price includes: cost + export tax + profit.
Currency conversion is needed to calculate selling price in foreign currency.
Example Qn:
Q: 900 Pasmina shawls cost Rs. 4,000 each. Export tax 5%, profit 20%, €1=Rs.130. Find total selling price in Euros.
Solution:
Total cost = 900 × 4000 = 36,00,000
After 5% tax = 36,00,000 + 1,80,000 = 37,80,000
Add 20% profit = 37,80,000 + 7,56,000 = 45,36,000
Convert to Euros = 45,36,000 ÷ 130 = €34,892.30
6. Key Formulas
Currency Conversion via Rupees:
Currency A=Value in NRsRate of A\text{Currency A} = \frac{\text{Value in NRs}}{\text{Rate of A}}Currency A=Rate of AValue in NRs
Profit/Loss in currency exchange:
Profit/Loss=(Old Rate−New Rate)×Amount in Foreign Currency\text{Profit/Loss} = (\text{Old Rate} - \text{New Rate}) \times \text{Amount in Foreign Currency}Profit/Loss=(Old Rate−New Rate)×Amount in Foreign Currency
Chain Rule for currency conversion:
A→B→C:A×B×C=B×C×AA \to B \to C : A \times B \times C = B \times C \times AA→B→C:A×B×C=B×C×A
7. Practice Questions with Solutions
Q: Rs. 85,500 exchanged into $ (1$ = Rs.126.35). How much $?
A: 85,500 ÷ 126.35 = $676.69
Q: Convert 250 AUD into Swiss Frank (1 AUD = Rs.87.82, 1 CHF = Rs.133.76).
A: 250 × 87.82 ÷ 133.76 = 164.14 CHF
Q: Sell Rs. 2,00,000 in Australian $ (1 AUD = Rs.88.23 selling).
A: 2,00,000 ÷ 88.23 = AUD 2266.80
Q: American $500 = £390, £50 = Rs.7,547. How many $ for Rs.10,308?
A: $87.55
Q: Salary in Australia: 37 AUD/hour, 5 hours/day, 6 days/week, Rs.90/AUD. Find weekly salary in NRs.
A: 37 × 5 × 6 = 1,110 AUD; 1,110 × 90 = Rs.99,900
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