Question

The spot exchange rates for Japanese yen are $0.0082/¥ and $0.0098/¥. Calculate the indirect ask rate for yen.

Answer format: keep four decimals and include the price currency. Examples: 2.3021 (dollar); 2.3021 (yen).

Answer 1

Given Data

$/¥ = 0.0082/0.0098

Let me interpret this :

Inorder to Buy yen the ask rate us 0.0098$ and Sell rate or Bid rate is 0.0082$

Direct rates are those is where the cost of one unit of foreign currency is given in units of local currency, whereas indirect rates is where the cost of one unit of local currency is given in units of foreign currency.

Now inorder to calculate indirect rates we have to find out ¥/$ rate

That is ¥/$ = (1/0.0098)/(1/0.0082) = 102.0408/121.9512

Indirect Quote is inorder to buy dollar the ask rate is ¥121.9512 and sell rate or Bid rate is 102.0408