Question

Dealer A quotes 1.5053 – 62 for the EUR/NZD exchange rate to company XYB. Calculate

: (i) the price at which A is willing to buy the EUR

(ii) the price at which company XYB can buy the NZD

(iii) the price at which A is willing to sell the EUR

(iv) the price at which company XYB can sell the NZD

(v) the dealer’s spread

(vi) Dealer A also quotes EUR/USD 1.1832 – 700.

Calculate USD/NZD.

Answer 1

1. A is willing to buy the EUR at1.5053

2.XYZ can buy the NZU at1.5062

3. A is willing the sell the EUR IS 1.5062

4. XYZ ACN sell the NZU AT1.5053

5. Spread is the difference between ask and bid rate hence spread is .0009

6.USD/NZD

EUR/ NZD. -1.5053- 1.5062

EUR/USD- 1.1832 - 1.1700

Direct quote between usd and NZD is USD/EUR*EUR/NZD

Bid rate = 1.1832 / 1.5062= .7855

Ask = 1.1700 / 1.5053 =.7772