1.Currency
Currency is the official money of a country used for buying and selling goods and services.
Each country has its own currency.
Nepal = Nepali Rupee (NRs)
USA = US Dollar ($)
China = Yuan
UK = Pound (£)
A country’s currency cannot usually be used directly in another country. It must be exchanged into the foreign country’s currency.
People working abroad send money to Nepal through banks or remittance services. The foreign currency is converted into Nepali Rupees at the current exchange rate.
Example:
Q: Can a Nepali student buy goods in the USA using Nepali Rupees?
Solution: No. The student must first exchange Nepali Rupees into US Dollars.
2.Exchange Rate
Exchange Rate is the value of one country’s currency in terms of another country’s currency.
In Nepal, exchange rates are determined by Nepal Rastra Bank.
Types of Exchange Rates:
Buying Rate
This is the rate at which the bank buys foreign currency from customers.
Selling Rate
This is the rate at which the bank sells foreign currency to customers.
The selling rate is always higher than the buying rate. The difference between them is the bank’s profit.
Formula:
Bank’s profit per unit = Selling rate − Buying rate
Example:
$1 = Rs.127.50 (buying)
$1 = Rs.128 (selling)
Profit per $1 = 128 − 127.50 = Rs.0.50
Profit on $500 = 0.50 × 500 = Rs.250
3.Currency Conversion
Currency conversion means changing money from one currency to another.
If direct conversion is not given, Nepali Rupees can be used as a bridge currency.
Basic Formula:
Foreign Currency = Amount in NRs ÷ Exchange Rate
If converting from foreign currency to NRs:
Amount in NRs = Foreign Currency × Exchange Rate
Example:
1 CAD = Rs.98.08
10 JPY = Rs.9.37
First find 1 JPY in NRs:
1 JPY = 9.37 ÷ 10 = Rs.0.937
Now convert CAD to JPY:
1 CAD = 98.08 ÷ 0.937 = 104.67 JPY
4.Profit and Loss in Currency Exchange
When exchange rates change, profit or loss may occur.
If the rate decreases after buying foreign currency, there is a loss.
If the rate increases after buying foreign currency, there is a profit.
Formula:
Profit or Loss = (Old Rate − New Rate) × Foreign Currency Amount
Example:
Rs.8,40,000 exchanged into pounds at 1£ = Rs.150
Pounds bought = 8,40,000 ÷ 150 = £5,600
After 5 days, rate decreases by 5%
5% of 150 = 7.5
New rate = 150 − 7.5 = Rs.142.50
New amount in Rs = 5,600 × 142.50 = Rs.7,98,000
Loss = 8,40,000 − 7,98,000 = Rs.42,000
5.Import and Export
In international trade, goods are bought and sold between countries.
Export means selling goods to another country.
Import means buying goods from another country.
When exporting goods, total selling price includes:
Total cost + Export tax + Profit
Currency conversion is needed to find the price in foreign currency.
Example:
900 Pashmina shawls cost Rs.4,000 each
Total cost = 900 × 4,000 = Rs.36,00,000
Export tax 5%
Tax = 5% of 36,00,000 = Rs.1,80,000
New total = 37,80,000
Profit 20%
Profit = 20% of 37,80,000 = Rs.7,56,000
Final amount = 45,36,000
If €1 = Rs.130
Selling price in Euros = 45,36,000 ÷ 130 = €34,892.30
6.Key Formulas
Currency conversion to foreign currency:
Foreign Currency = Amount in NRs ÷ Rate
Currency conversion to Nepali Rupees:
Amount in NRs = Foreign Currency × Rate
Bank’s profit per unit = Selling rate − Buying rate
Profit or Loss in exchange = (Old Rate − New Rate) × Foreign Currency
7. Practice Questions with Solutions
Q1: Rs.85,500 is exchanged into US Dollars at 1$ = Rs.126.35. How many dollars are received?
Step 1: Write the formula
Foreign Currency = Amount in NRs ÷ Rate
Step 2: Substitute values
= 85,500 ÷ 126.35
Step 3: Calculate
= 676.69
Answer: $676.69
Q2: Convert 250 AUD into Swiss Franc (CHF).
1 AUD = Rs.87.82
1 CHF = Rs.133.76
Step 1: Convert AUD into NRs
250 × 87.82 = Rs.21,955
Step 2: Convert NRs into CHF
21,955 ÷ 133.76 = 164.14
Answer: 164.14 CHF
Q3: A person sells Rs.2,00,000 to buy Australian Dollars at selling rate 1 AUD = Rs.88.23. How many AUD will he receive?
Step 1: Use formula
Foreign Currency = Amount in NRs ÷ Selling Rate
Step 2: Substitute
= 2,00,000 ÷ 88.23
Step 3: Calculate
= 2266.80
Answer: AUD 2266.80
Q4: A bank’s buying rate is Rs.127.50 and selling rate is Rs.128 for $1. Find the bank’s profit on $800.
Step 1: Profit per dollar
= 128 − 127.50
= Rs.0.50
Step 2: Total profit
= 0.50 × 800
= Rs.400
Answer: Rs.400
Q5: Rs.9,00,000 is exchanged into pounds at 1£ = Rs.150. After 10 days, the rate increases to Rs.155 per £. Find profit or loss.
Step 1: Find pounds bought
= 9,00,000 ÷ 150
= £6,000
Step 2: Convert back at new rate
= 6,000 × 155
= Rs.9,30,000
Step 3: Compare amounts
Profit = 9,30,000 − 9,00,000
= Rs.30,000
Answer: Profit of Rs.30,000
Q6: An exporter buys goods worth Rs.5,00,000. Export tax is 8% and profit is 25%. 1$ = Rs.125. Find selling price in dollars.
Step 1: Add tax
8% of 5,00,000 = 40,000
New total = 5,40,000
Step 2: Add profit
25% of 5,40,000 = 1,35,000
Final price in NRs = 6,75,000
Step 3: Convert to dollars
= 6,75,000 ÷ 125
= $5,400
Answer: $5,400
Q7: Salary in Qatar is 4,500 Riyal per month. 1 Riyal = Rs.36.50. Find salary in Nepali Rupees.
Step 1: Multiply by exchange rate
= 4,500 × 36.50
Step 2: Calculate
= Rs.1,64,250
Answer: Rs.1,64,250
Q8: $500 = £390 and £50 = Rs.7,547. How many dollars equal Rs.10,308?
Step 1: Find value of £1 in Rs
= 7,547 ÷ 50
= Rs.150.94
Step 2: Convert Rs to pounds
= 10,308 ÷ 150.94
= £68.30
Step 3: Use dollar to pound ratio
$500 = £390
$1 = 390 ÷ 500
= £0.78
Step 4: Convert pounds to dollars
= 68.30 ÷ 0.78
= $87.55
Answer: $87.55
Q9: Rs.15,24,000 is exchanged into US Dollars at 1$ = Rs.127. Later the rate becomes Rs.130. Find profit or loss if dollars are exchanged back.
Step 1: Convert NRs into dollars
= 15,24,000 ÷ 127
= $12,000
Step 2: Convert dollars back into NRs at new rate
= 12,000 × 130
= Rs.15,60,000
Step 3: Compare amounts
Profit = 15,60,000 − 15,24,000
= Rs.36,000
Answer: Profit of Rs.36,000
Q10: A person buys €3,000 at 1€ = Rs.145. After some time, the rate falls to Rs.138. Find profit or loss.
Step 1: Money spent
= 3,000 × 145
= Rs.4,35,000
Step 2: New value
= 3,000 × 138
= Rs.4,14,000
Step 3: Compare
Loss = 4,35,000 − 4,14,000
= Rs.21,000
Answer: Loss of Rs.21,000
Q11: A company imports goods worth $20,000. If 1$ = Rs.128 and customs tax is 12%, find total cost in NRs.
Step 1: Convert into NRs
= 20,000 × 128
= Rs.25,60,000
Step 2: Add 12% tax
12% of 25,60,000 = 3,07,200
Step 3: Total cost
= 25,60,000 + 3,07,200
= Rs.28,67,200
Answer: Rs.28,67,200
Q12: A Nepali worker earns 3,200 Riyal per month. 1 Riyal = Rs.36.50. Find his yearly income in NRs.
Step 1: Monthly income in NRs
= 3,200 × 36.50
= Rs.1,16,800
Step 2: Yearly income
= 1,16,800 × 12
= Rs.14,01,600
Answer: Rs.14,01,600
Q13: 1 CAD = Rs.102 and 1 AUD = Rs.85. Convert 750 CAD into AUD.
Step 1: Convert CAD to NRs
= 750 × 102
= Rs.76,500
Step 2: Convert NRs to AUD
= 76,500 ÷ 85
= 900 AUD
Answer: 900 AUD
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