Question

An Australian exporter has supplied goods to India and will receive 2 million Indian rupees (INR) in one year. The exporter expects that the value of the INR will depreciate by 22.41% against the Australian dollar from today’s spot rate of 0.2735 in one year. How much Australian dollar the exporter will make a loss in percentage (%) due to depreciation of INR after one year? (enter 2 decimal places number with no sign or symbol)

Answer 1

Today's spot rate = 0.2735 AUD/INR

INR is expected to depreciate by 22.41%

Expected spot rate = 0.2735 * (1 - 0.2241)

Expected spot rate = 0.21220865 AUD/INR

Loss = (Today's spot rate - Expected spot rate) * INR amount to receive

Loss = (0.2735 - 0.21220865) * 2,000,000

Loss = 0.06129135 * 2,000,000

Loss = AUD 122,582.7

Loss percentage = Loss in AUD/(Today's spot rate * INR amount to receive)

Loss percentage = 122,582.7/(0.2735 * 2,000,000)

Loss percentage = 0.2241

Loss percentage = 22.41%

Answer: 22.41