Answer to Question #269554 in Macroeconomics for hyaat

Question

A forex trader from Mumbai collects the below information regarding the exchange rate between INR and USD:

Bid Price: INR / USD = 74.2400

Ask Price: INR / USD = 74.2500

If the bid and ask rate for USD-EUR are available as USD 1.16776-1.16782/EUR, what would be the bid-ask rates for INR/EUR, using the cross-rate method

Answer 1

Bid Price  INR/EUR:

if 1 USD = 74.2400 INR

1.16776 USD = ?

$74.2400 \times 1.16776 = 86.6945024$

Ask Price for  INR/EUR:

if 1 USD = 74.2500 INR

1.16782 USD = ?

$74.2500\times1.16782 =86.710635$