forex ca final

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anurag (Querist)
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05 December 2010 In case of appreciation or depreciation of a currency , in which currency adjustment is to be made i.e. in same currency which is appreciated/depreciated or in opposite currency
for eg:
Q. $1=200rubles.find future exchange rate if
(1)value of rubles is appreciated by 10%
(2)value of rubles is depreciated by 10%
(3)value of dollar is appreciated by 10%
(4)value of dollar is depreciated by 10%
SOLUTION A=reverse adjustment is made in same currency
(1)$1=R200-10%
$1=R180
(2)$1=R200+10%
$1=R220
(3)$1-10%=R200
$0.9=R200
(4)$1+10%=R200
$1.1=R200
or,
SOLUTION B=given adjustment is made in opposite currency
(1)$1+10%=R200
$1.1=R200
(2)$1-10%=R200
$0.9=R200
(3)$1=R200+10%
$1=R220
(4)$1=R200-10%
$1=R180

which solution is correct and why? plz give ur advice.
i am confused that in which currency effect should be given i.e, in same currency or opposite currency or in home currency?
regards

B. Hari Gopal

B. Hari Gopal (Expert)
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05 December 2010 Your Solution A is correct.

In India, Rs is the base currency and depreciation or appreciation will be calculated for Rs

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