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
CAclubindia
