Answer to Question #236063 in Economics for RKP

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

You are required to help him with the below questions he has:

(a) What is the direct exchange rate of INR-USD for the trader?

(b) What is the indirect exchange rate of INR-USD for the trader?

(c) What is a cross rate? 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

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