Question

is are A person bought some Australian dollar of NAS 1,50,000 according to exchange rate, Austration dollar 1 = NRS 77 02. After five days in comp to Australian dollar Nepali currency Nepali currencys of devaluated by 57. what is profit or loss. person when exchanged the dollars he had into Nepali rupeess agan in that day. the Here,​

Answer 1

5.26% profit

Explanation:

The exchange of 1,50,000 NRs to A$ will give ...

A$ 1/(NRs 77.02) = x /1,50,000

x = A$ 1,50,000/77.02 = A$ 1947.54 . . . . . (rounded down)

If the Nepali rupees are devalued by 5%, then what did buy A$ 1 will now buy only A$ 0.95. Then the exchange back to NRs will give ...

(NRs 77.02)/(A$ 0.95) = x/(A$ 1947.54)

x = NRs (1947.54)(77.02/0.95) = NRs 1,57,894.24

The effective profit is the difference from the amount initially exchanged, NRs 7,894.24, or ...

(1,57,984.24/1,50,000 -1) × 100% ≈ 5.26%

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Additional comment

Except for the loss in the exchange due to rounding down, the profit would be 1/0.95 -1 = 5.2632%. Instead, it is 5.2628%. This is why investors move their money to investments that retain their value when the local currency is losing its value.