CAIIB FOREX problems solved

TT buying rates for GBP 50,000.00 inward payment, if USD/INR is 68.50/52 and GBP/USD is 1.6050/60, Ignore Margins

This question is taken from CAIIB IIBF books quote rate problems, and the solution to this problem is given below.

This is a TT buying problem, and since there is no direct quote from GBP to INR is available, we need to sell GBP to buy USD, and then Sell USD to buy INR.

When we sell GBP in London market to convert it to USD, we will be given lesser of the quoted rate(bank buying rate or bank bid rate of GBP) i.e 1.6050

Again when we sell USD to obtain INR, we will be given lesser of the USD/INR quote rate i.e 68.50

Using the cross rate mechanism 1 GBP =  (1.6050 * 68.50)INR

For 50,000 GBP = 50,000 * 1.6050 * 68.50 INR

So the answer is 54,97,125/- INR